Social networks and trade of services: Modelling interregional flows with spatial and network autocorrelation effects

Abstract

Recent literature on border effect has fostered research on informal barriers to trade and the role played by network dependencies. In relation to social networks, it has been shown that intensity of trade in goods is positively correlated with migration flows between pairs of countries/regions. In this article, we investigate whether such a relation also holds for interregional trade of services. We also consider whether interregional trade flows in services linked with tourism exhibit spatial and/or social network dependence. Conventional empirical gravity models assume the magnitude of bilateral flows between regions is independent of flows to/ from regions located nearby in space, or flows to/from regions related through social/cultural/ethic network connections. With this aim, we provide estimates from a set of gravity models showing evidence of statistically significant spatial and network (demographic) dependence in the bilateral flows of the trade of services considered. The analysis has been applied to the Spanish intra- and interregional monetary flows of services from the accommodation, restaurants and travel agencies for the period 2000 2009, using alternative datasets for the migration stocks and definitions of network effects.