GEP 11/02: Ethnic Networks and Trade: Intensive vs. Extensive Margins

Summary

Ethnic networks, used as proxies for information networks, have been associated with increased international trade. The present paper finds that ethnic networks increase trade on the intensive margin, but not on the extensive margin.

Abstract

Ethnic networks—as proxies for information networks—have been associated with higher levels of international trade. Previous research has not differentiated between the roles of these networks on the extensive and intensive margins. The present paper does so using a model with fixed effects, finding that ethnic networks increase trade on the intensive margin but not on the extensive margin.

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Authors

Cletus C. Coughlin and Howard J. Wall

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