Measuring network effects on trade: A reexamination

Building upon [Greaney, T.M., 2005. Measuring network effects on trade: are Japanese affiliates distinctive? Journal of the Japanese and International Economies 19, 194-214], this research provides improved estimates of the impact of network effects on trade conducted by foreign affiliates operating in the US. With an expanded and improved data set, I find that both home and regional biases are much stronger for affiliates' imports than for their exports. At the country-specific level, I find evidence to support the hypothesis that Japanese affiliates have particularly strong network effects, but these effects are limited to a home bias effect alone. Although Japanese affiliates show signs of a regional, or Asian, network effect in their import pattern, the strength of this effect is the weakest among all of the countries tested. Only two countries' affiliates show signs of regional bias in their export behavior, Australia and the Netherlands.