Bound by Ancestors: Immigration, Credit Frictions, and Global Supply Chain Formation

Jaerim Choi (), Jay Hyun and Ziho Park

No 31157, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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.

JEL-codes: F14 F22 F36 F60 G30 J61 L14 (search for similar items in EconPapers)
Date: 2023-04
New Economics Papers: this item is included in nep-int, nep-mig, nep-net and nep-ure
Note: CF DEV IFM ITI
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Published as Jaerim Choi & Jay Hyun & Ziho Park, 2023. "Bound by ancestors: Immigration, credit frictions, and global supply chain formation," Journal of International Economics, .

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Journal Article: Bound by ancestors: Immigration, credit frictions, and global supply chain formation (2024)
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