Bound by Ancestors: Immigration, Credit Frictions, and Global Supply Chain Formation / Jaerim Choi, Jay Hyun, Ziho Park.

Format:

Book

Author/Creator:

Choi, Jaerim.

Contributor:

National Bureau of Economic Research.

Hyun, Jay.

Park, Ziho.

Series:

Working Paper Series (National Bureau of Economic Research) no. w31157.

NBER working paper series no. w31157

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2023.

Summary:

This paper shows that the ancestry composition shaped by century-long immigration to the US can explain the current structure of global supply chain networks. Using an instrumental variable strategy, combined with a novel dataset that links firm-to-firm global supply chain information with a US establishment database and historical migration data, we find that the co-ethnic networks formed by immigration have a positive causal impact on global supply chain relationships between foreign countries and US counties. Such a positive impact not only exists in conventional supplier-customer relationships but also extends to strategic partnerships and trade in services. Examining the causal mechanisms, we find that the positive impact is stronger for counties in which more credit-constrained firms are located and that such a stronger effect becomes even more pronounced for foreign firms located in countries with weak contract enforcement. Collectively, the results suggest that co-ethnic networks serve as social collateral to overcome credit constraints and facilitate global supply chain formation.

Notes:

Print version record

April 2023.