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Measuring network effects on trade: are Japanese affiliates distinctive?

  • Theresa M. Greaney

This paper examines network effects on trade by comparing the trade patterns of foreign affiliates in the United States with the trade patterns of U.S.-owned firms. The evidence strongly supports the following hypotheses: 1) foreign affiliates behave differently from U.S. firms in their trade patterns; 2) in particular, foreign affiliates display strong home biases in their trade patterns; and 3) among the foreign affiliates, Japanese affiliates demonstrate by far the strongest home bias in their trade patterns. Controlling for income and distance effects, foreign affiliates from Canada, France, Germany, the Netherlands and Switzerland traded on average 17 times more with their respective home countries and those from the United Kingdom traded 30 times more with the United Kingdom, while Japanese affiliates traded a whopping 130 times more with Japan.

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File URL: http://hi-stat.ier.hit-u.ac.jp/research/discussion/2004/pdf/D04-57.pdf
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Paper provided by Institute of Economic Research, Hitotsubashi University in its series Hi-Stat Discussion Paper Series with number d04-57.

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Date of creation: Dec 2004
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Handle: RePEc:hst:hstdps:d04-57
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  1. Alessandra Casella & James E. Rauch, 1997. "Anonymous Market and Group Ties in International Trade," NBER Working Papers 6186, National Bureau of Economic Research, Inc.
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  4. Keith Head & John Ries & Barbara J. Spencer, 2002. "Vertical Networks and US Auto Parts Exports: Is Japan Different?," NBER Working Papers 9162, National Bureau of Economic Research, Inc.
  5. Theresa Greaney, 2002. "Reverse Importing and Asymmetric Trade and FDI: A Networks Explanation," Working Papers 200215, University of Hawaii at Manoa, Department of Economics.
  6. Kazuo Ueda & Yuri Nagataki Sasaki, 1998. "The import behavior of Japanese corporate groups: Evidence from micro-survey data," Japan and the World Economy, Elsevier, vol. 10(1), pages 1-11, January.
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  10. K.C. Fung, 1991. "Characteristics of Japanese Industrial Groups and Their Potential Impact on U. S . - Japanese Trade," NBER Chapters, in: Empirical Studies of Commercial Policy, pages 137-168 National Bureau of Economic Research, Inc.
  11. McLaren, J, 1996. "Supplier Relations and the Market Context : A Theory of Handshakes," Papers 766, Yale - Economic Growth Center.
  12. Greif, Avner, 1993. "Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition," American Economic Review, American Economic Association, vol. 83(3), pages 525-48, June.
  13. Gould, David M, 1994. "Immigrant Links to the Home Country: Empirical Implications for U.S. Bilateral Trade Flows," The Review of Economics and Statistics, MIT Press, vol. 76(2), pages 302-16, May.
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  15. James E. Rauch, 1996. "Trade and Search: Social Capital, Sogo Shosha, and Spillovers," NBER Working Papers 5618, National Bureau of Economic Research, Inc.
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