Out of sight, not out of mind. Education networks and international trade

This paper investigates the impact of international students on the UK bilateral trade with 167 partner economies during 1999-2009. The base hypothesis is that transnational social networks lower the invisible trade barriers existing between countries. University students typically develop ties of friendship and trust that can last for decades after graduation and may evolve into economic and business ties. I find robust evidence that education networks boost the bilateral trade between the UK and the home countries of graduates and students. At a more disaggregated level, the strongest effects on exports and imports derive from the networks linked to the Middle East and to the new member countries of the European Union.