IDEAS home Printed from https://ideas.repec.org/p/lmu/muenar/20602.html
   My bibliography  Save this paper

Ethnic networks, information, and international trade: Revisiting the evidence

Author

Listed:
  • Felbermayr, Gabriel
  • Jung, Benjamin
  • Toubal, Farid

Abstract

Influential empirical work by Rauch and Trindade (REStat, 2002) finds that Chinese ethnic networks of the magnitude observed in Southeast Asia increase bilateral trade by at least 60%. We argue that this estimate is upward biased due to omitted variable bias. Moreover, it is partly related to a preference effect rather than to enforcement and/or the availability of information. Applying a theory-based gravity model to ethnicity data for 1980 and 1990, and focusing on pure network effects, we find that the Chinese network leads to a more modest amount of trade creation of about 15%. Using new data on bilateral stocks of migrants from the World Bank for the year of 2000, we extend the analysis to all potential ethnic networks. We find, i.a., evidence for a Polish, a Turkish, a Mexican, or an Indian network. While confirming the existence of a Chinese network, its trade creating potential is dwarfed by other ethnic networks.

Suggested Citation

  • Felbermayr, Gabriel & Jung, Benjamin & Toubal, Farid, 2009. "Ethnic networks, information, and international trade: Revisiting the evidence," Munich Reprints in Economics 20602, University of Munich, Department of Economics.
  • Handle: RePEc:lmu:muenar:20602
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    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, vol. 88(1), pages 182-186, February.
    2. Parsons, Christopher R. & Skeldon, Ronald & Walmsley, Terrie L. & Winters, L. Alan, 2007. "Quantifying international migration : a database of bilateral migrant stocks," Policy Research Working Paper Series 4165, The World Bank.
    3. Richard Baldwin & Daria Taglioni, 2006. "Gravity for Dummies and Dummies for Gravity Equations," NBER Working Papers 12516, National Bureau of Economic Research, Inc.
    4. Robert C. Feenstra & Robert E. Lipsey & Haiyan Deng & Alyson C. Ma & Hengyong Mo, 2005. "World Trade Flows: 1962-2000," NBER Working Papers 11040, National Bureau of Economic Research, Inc.
    5. Rauch, James E., 1999. "Networks versus markets in international trade," Journal of International Economics, Elsevier, vol. 48(1), pages 7-35, June.
    6. Combes, Pierre-Philippe & Lafourcade, Miren & Mayer, Thierry, 2005. "The trade-creating effects of business and social networks: evidence from France," Journal of International Economics, Elsevier, vol. 66(1), pages 1-29, May.
    7. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 691-751, September.
    8. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    9. Daniel J. Henderson & Daniel L. Millimet, 2008. "Is gravity linear?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(2), pages 137-172.
    10. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
    11. Carolyn L. Evans, 2003. "The Economic Significance of National Border Effects," American Economic Review, American Economic Association, vol. 93(4), pages 1291-1312, September.
    12. 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.
    13. Wagner, Don & Head, Keith & Ries, John, 2002. "Immigration and the Trade of Provinces," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(5), pages 507-525, December.
    14. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    15. Klein Paul & Ventura Gustavo J, 2007. "TFP Differences and the Aggregate Effects of Labor Mobility in the Long Run," The B.E. Journal of Macroeconomics, De Gruyter, vol. 7(1), pages 1-38, May.
    16. Felbermayr, Gabriel J. & Jung, Benjamin, 2009. "The pro-trade effect of the brain drain: Sorting out confounding factors," Economics Letters, Elsevier, vol. 104(2), pages 72-75, August.
    17. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-623, June.
    18. Moses, Jonathon W. & Letnes, Bjorn, 2004. "The Economic Costs to International Labor Restrictions: Revisiting the Empirical Discussion," World Development, Elsevier, vol. 32(10), pages 1609-1626, October.
    19. James E. Rauch & Vitor Trindade, 2002. "Ethnic Chinese Networks In International Trade," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 116-130, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Murat Genc & Masood Gheasi & Peter Nijkamp & Jacques Poot, 2012. "The impact of immigration on international trade: a meta-analysis," Chapters,in: Migration Impact Assessment, chapter 9, pages 301-337 Edward Elgar Publishing.
    2. Mariya Aleksynska & Giovanni Peri, 2014. "Isolating the Network Effect of Immigrants on Trade," The World Economy, Wiley Blackwell, vol. 37(3), pages 434-455, March.
    3. Hiller, Sanne, 2011. "Does Immigrant Employment Matter for Exports? Evidence From Denmark," Working Papers 11-16, University of Aarhus, Aarhus School of Business, Department of Economics.
    4. Lin, Xiaohua & Yang, Xiyan, 2017. "From human capital externality to entrepreneurial aspiration: Revisiting the migration-trade linkage," Journal of World Business, Elsevier, vol. 52(3), pages 360-371.
    5. Sanne Hiller, 2014. "The Export Promoting Effect of Emigration: Evidence from Denmark," Review of Development Economics, Wiley Blackwell, vol. 18(4), pages 693-708, November.
    6. Michal Burzynski & Frédéric Docquier & Hillel Rapoport, 2018. "The Changing Structure of Immigration to the OECD: What Welfare Effects on Member Countries?," Working Papers 2018-09, CEPII research center.
    7. Heid, Benedikt & Larch, Mario, 2012. "Migration, trade and unemployment," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 6, pages 1-40.
    8. CHRIS MILNER & DANNY McGOWAN, 2013. "Trade Costs And Trade Composition," Economic Inquiry, Western Economic Association International, vol. 51(3), pages 1886-1902, July.
    9. 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.
    10. repec:gam:jsusta:v:10:y:2018:i:5:p:1439-:d:144751 is not listed on IDEAS
    11. Michal Burzynski & Frédéric Docquier & Hillel Rapoport, 2018. "The Changing Structure of Immigration to the OECD: What Welfare Effects on Member Countries?," Working Papers 2018-09, CEPII research center.
    12. Magnus Lodefalk, 2016. "Temporary expats for exports: micro-level evidence," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(4), pages 733-772, November.
    13. repec:oup:jecgeo:v:17:y:2017:i:5:p:1009-1038. is not listed on IDEAS
    14. Pierre-Louis Vézina, 2012. "How Migrant Networks Facilitate Trade: Evidence from Swiss Exports," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 148(III), pages 449-476, September.

    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lmu:muenar:20602. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tamilla Benkelberg). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.