CREAT: Census Research Exploration and Analysis Tool

Do Institutions Determine Economic Geography? Evidence from the Concentration of Foreign Suppliers

February 2019

Working Paper Number:

CES-19-05

Abstract

Do institutions shape the geographic concentration of industrial activity? We explore this question in an international trade setting by examining the relationship between country-level institutions and patterns of spatial concentration of global sourcing. A priori, weak institutions could be associated with either dispersed or concentrated sourcing. We exploit location and transaction data on imports by U.S. firms and adapt the Ellison and Glaeser (1997) index to construct a product-country-specific measure of supplier concentration for U.S. importers. Results show that U.S. importers source in a more spatially concentrated manner from countries with weaker contract enforcement. We find support for the idea that, where formal contract enforcement is weak, local supplier networks compensate by sharing information to facilitate matching and transactions.

Document Tags and Keywords

Keywords Keywords are automatically generated using KeyBERT, a powerful and innovative keyword extraction tool that utilizes BERT embeddings to ensure high-quality and contextually relevant keywords.

By analyzing the content of working papers, KeyBERT identifies terms and phrases that capture the essence of the text, highlighting the most significant topics and trends. This approach not only enhances searchability but provides connections that go beyond potentially domain-specific author-defined keywords.
:
manufacturing, import, export, manufacturer, foreign trade, international trade, tariff, exporter, foreign, regulatory, country, spillover, contract, supplier, externality, institutional, trading, importer, custom, sourcing, firms trade

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:
Ordinary Least Squares, Longitudinal Business Database, World Bank, Longitudinal Firm Trade Transactions Database, Michigan Institute for Data Science

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