Chapter 6: The Importance of Trade-facilitating Infrastructure
In this chapter, we begin our exploration of the possible factors that underlie immigrants’ abilities to influence trade between the US and their home countries. Specifically, the topic of trade-facilitating infrastructure (or lack thereof) is explored as is the role that such infrastructure plays with respect to trade-related transaction costs. In Chapters 4 and 5, the history of US immigration is reviewed and a clear distinction is shown in terms of the source countries for immigrant inflows prior to and following the implementation of the Immigration and Nationality Act of 1965. Given the shift in source countries, we also consider whether the pre-1968 and post-1968 home country cohorts vary in terms of the presence and quality of such infrastructure. The existence and quality of trade-facilitating infrastructure is directly related to trade-related transaction costs. In terms of imports, superior infrastructure aids in the reduction of distribution margins which then results in lower product prices and corresponding increases in consumer welfare. By reducing transaction costs, such infrastructure serves to add value and, in doing so, increases exporters’ profits by forming or expanding linkages to global distribution networks (Brooks, 2008). Considering the relationship between infrastructure and exporting, Francois and Manchin (2007) report that infrastructure is a significant determinant of whether exporting occurs and, if it does, the level of exporting that is observed. Expected variation in the immigrant–trade link, in terms of the proportional influences of immigrants from post-1968 home countries being greater than those of immigrants who are from pre-1968 home...
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