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Vol. 72, No. 1, pp. 59-80 (2021)

“The Effect of Social Ties’ Attraction on International Trade and Foreign Direct Investment: A Meta-Analysis of the Empirical Studies of Central and Eastern European and Former Soviet Union Countries”
Masahiro Tokunaga (Faculty of Business and Commerce, Graduate School of Business and Commerce, Kansai University)

In this paper, we focus on social ties—social relationships based on the amalgamation of history, culture, people, language, and other factors over long periods of time—as a determinant of international trade and foreign direct investment (FDI) in Central and Eastern Europe and the former Soviet Union. As a result of the meta-analysis of studies that empirically examine the economic impacts of proxy variables for these social ties upon trade and FDI performance over the past quarter century, we find that the existing literature reports a statistically significant nonzero attraction effect as a whole, and especially a genuine effect is confirmed for language- and immigrant-related variables beyond the publication selection bias. At the same time, their effective size is very small as compared to those of other trade and FDI determinants, with each genuine effect detected as well by meta-analysis. This suggests that we should deliberately approach this issue to avoid an overestimation of the trade and FDI attraction effect of social ties in the area.