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Séminaire d’économie de Bordeaux

Sandra Poncet

(PSE, Université Paris I Panthéon Sorbonne)

 » Air travel as a provider of face-to-face interactions:  the impact on international trade of airline connectivity in China »

By Chang Jing (PSE) and  Sandra Poncet (Paris School of Economics – Université Paris 1)

Abstract:

This article investigates how the intensification of face-to-face interactions between China and the rest of the world has contributed to the internationalization of China’s trade. We use the introduction of direct airlines connections between Chinese localities and international countries as an exogenous source of change in face-to-face interactions over the period 1992-2019. Our difference-in-difference results show the introduction of a direct weekly flight between a Chinese province and an international country raises trade by 5%. The impact is consistently more pronounced in the 1990s, where other nonpersonal means of information transmission was less developed and for products with higher face-to-face communication requirements. The positive effect on trade is also greater for products that are more intensive in face-to-face interactions suggesting the importance of informational barriers to trade.

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