International trade and social connectedness

We use de-identified data from Facebook to construct a new and publicly available measure of the pairwise social connectedness between 170 countries and 332 European regions. We find that two countries trade more when they are more socially connected, especially for goods where information frictions...

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Bibliographic Details
Published in:Journal of international economics 2021-03, Vol.129, p.103418, Article 103418
Main Authors: Bailey, Michael, Gupta, Abhinav, Hillenbrand, Sebastian, Kuchler, Theresa, Richmond, Robert, Stroebel, Johannes
Format: Article
Language:English
Subjects:
Border effects
Business schools
Information frictions
International trade
Social connectedness
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Summary:We use de-identified data from Facebook to construct a new and publicly available measure of the pairwise social connectedness between 170 countries and 332 European regions. We find that two countries trade more when they are more socially connected, especially for goods where information frictions may be large. The social connections that predict trade in specific products are those between the regions where the product is produced in the exporting country and the regions where it is used in the importing country. Once we control for social connectedness, the estimated effects of geographic distance and country borders on trade decline substantially.
ISSN:0022-1996
1873-0353
DOI:10.1016/j.jinteco.2020.103418