Ethnic Chinese networks, as proxied by the product of ethnic Chinese population shares, are found in 1980 and 1990 to have increased bilateral trade both between Chinese and the rest countires pairs a...
Ethnic Chinese networks, as proxied by the product of ethnic Chinese population shares, are found in 1980 and 1990 to have increased bilateral trade both between Chinese and the rest countires pairs and for all other country pairs. We interpret these and other, comlementary findings as showing that (1) where ethnic Chinese communities are relatively large fractions of their countries population and have relatively numerous direct connections across international borders, they facilitate international trade primarily by helping to match international buyers and sellers in characteristics space, and (2) ethnic Chinese communities that are small fractions of their countries' populations are close-knit and facilitate international trade mainly by enforcing community sanctions that deter opportunistic behavior. The estimated increase in bilateral trade attributable to ethnic Chinese networks about 6~110 percent, suggesting that the informal trade barriers these networks help to overcome are economically important.
The first section survey the roles of transnational networks in alleviating problems of contract enforcement and providing information about trading opportunities. The nest main section covers how ethnic Chinese networks influence international trade through their impact on the volume of international trade.