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Migrant Networks as substitute for institutions: Evidence from Swiss trade

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Abstract

This paper uses an untapped dataset on Swiss immigration and a novel instrumental variable to test three channels through which migrants promote trade. The main finding is that migrant networks are an effective substitute for formal institutions in facilitating trade. The effect takes place entirely on the extensive margin, suggesting migrant networks may be reducing fixed entry costs characterized by corruption.

Suggested Citation

  • Pierre-Louis Vézina, 2010. "Migrant Networks as substitute for institutions: Evidence from Swiss trade," IHEID Working Papers 03-2010, Economics Section, The Graduate Institute of International Studies.
  • Handle: RePEc:gii:giihei:heidwp03-2010
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    1. James A. Dunlevy, 2006. "The Influence of Corruption and Language on the Protrade Effect of Immigrants: Evidence from the American States," The Review of Economics and Statistics, MIT Press, pages 182-186.
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    5. Gabriel J. Felbermayr & Benjamin Jung & Farid Toubal, 2010. "Ethnic Networks, Information, and International Trade: Revisiting the Evidence," Annals of Economics and Statistics, GENES, pages 41-70.
    6. Javorcik, Beata Smarzynska & Spatareanu, Mariana, 2008. "To share or not to share: Does local participation matter for spillovers from foreign direct investment?," Journal of Development Economics, Elsevier, vol. 85(1-2), pages 194-217, February.
    7. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, pages 1707-1721.
    8. Gábor Békés & Jörn Kleinert & Farid Toubal, 2009. "Spillovers from Multinationals to Heterogeneous Domestic Firms: Evidence from Hungary," The World Economy, Wiley Blackwell, pages 1408-1433.
    9. Felbermayr, Gabriel J. & Toubal, Farid, 2012. "Revisiting the Trade-Migration Nexus: Evidence from New OECD Data," World Development, Elsevier, vol. 40(5), pages 928-937.
    10. Gabriel J. Felbermayr & Benjamin Jung & Farid Toubal, 2010. "Ethnic Networks, Information, and International Trade: Revisiting the Evidence," Annals of Economics and Statistics, GENES, pages 41-70.
    11. repec:pse:psecon:2009-31 is not listed on IDEAS
    12. Javorcik, Beata S. & Özden, Çaglar & Spatareanu, Mariana & Neagu, Cristina, 2011. "Migrant networks and foreign direct investment," Journal of Development Economics, Elsevier, pages 231-241.
    13. Subhayu Bandyopadhyay & Cletus C. Coughlin & Howard J. Wall, 2008. "Ethnic Networks and US Exports," Review of International Economics, Wiley Blackwell, pages 199-213.
    14. Pamina Koenig, 2009. "Immigration and the export decision to the home country," PSE Working Papers halshs-00574972, HAL.
    15. James E. Rauch & Vitor Trindade, 2002. "Ethnic Chinese Networks In International Trade," The Review of Economics and Statistics, MIT Press, pages 116-130.
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    Keywords

    trade; migration; corruption;

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