The Trade Creating Effects of Business and Social Networks: Evidence from France

Pierre-Philippe Combes (1) , Miren Lafourcade (2) , Thierry Mayer (3)

1 GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille
2 PJSE - Paris-Jourdan Sciences Economiques
3 TEAM - Théories et Applications en Microéconomie et Macroéconomie

Using theory-grounded estimations of trade flow equations, this paper investigates the role that business and social networks play in shaping trade between French regions. The bilateral intensity of networks is quantified using the financial structure and location of French firms and bilateral stocks of migrants. Compared to a situation without networks, migrants are shown to double bilateral trade flows, while networks of firms multiply trade flows by as much as four in some specifications. Finally, taking network effects into account divides the estimation of the impact of transport costs and of the effect of administrative borders by around three.

Mots clés: Migrants; Business groups; Networks; Border effects; Gravity; Structural estimation

Domaines: Economies et finances

Pierre-Philippe Combes, Miren Lafourcade, Thierry Mayer. The Trade Creating Effects of Business and Social Networks: Evidence from France. Journal of International Economics, 2005, 66 (1), pp.1-29. ⟨10.1016/j.jinteco.2004.07.003⟩. ⟨hal-00268768⟩