International trade and social connectedness

We use de-identified data from Facebook to construct a new and publicly available measure of the pairwise social connectedness between 170 countries and 332 European regions. We find that two countries trade more when they are more socially connected, especially for goods where information frictions may be large. The social connections that predict trade in specific products are those between the regions where the product is produced in the exporting country and the regions where it is used in the importing country. Once we control for social connectedness, the estimated effects of geographic distance and country borders on trade decline substantially. (c) 2020 Elsevier B.V. All rights reserved.

Automated summary

The study shows that countries with closer social connections tend to trade more, especially for goods where information frictions may be large. Social connections between regions where products are produced in the exporting country and regions where they are used in the importing country predict trade in specific products. After controlling for social connectedness, the estimated effects of geographic distance and country borders on trade decline substantially.