The researchers propose to use a unique data set, the Survey of International Air Travelers (SIAT), that will make possible the doctoral dissertation of the co-PI on the subject of the interaction of international trade with international travel. The SIAT covers all overseas air travel from the U. S., by destination country, purpose of trip, and characteristics of the travelers including country of residence. These data are available quarterly for the period 1993 to the present. Intellectual merit. In her dissertation the co-PI will use the SIAT to investigate at least three topics. First, the direction of causality between trade and travel will be examined. Using appropriate panel estimation techniques, it will be determined whether bilateral business travel helps to forecast bilateral trade and vice-versa. Second, the dissertation will explore the mechanisms that underlie the increasingly well-established positive relationship between immigration and bilateral trade. The interactions between immigrant stocks and bilateral business and leisure travel by immigrants will be estimated for both U.S. exports and U.S. imports. The hypothesis will be tested that the interaction with leisure travel will be stronger relative to the interaction with business travel for bilateral imports than for bilateral exports. This would confirm the conjecture in the literature that the stronger impact of immigrants on imports than exports reflects the effect of immigrant taste for goods from their countries of origin over and above their promotion of trade through business contacts and provision of market information. Third, the co-PI will use the SIAT to extend recent results showing that business and social networks have a stronger positive impact on bilateral trade in differentiated than homogeneous products. It has been conjectured that these results reflect the more informationintensive nature of differentiated products. If this is true than differentiated products should require both greater sales effort and more after-sales service, and we expect to find stronger causal relationships running from bilateral business travel to bilateral trade and vice-versa for differentiated than for homogeneous products. Because the SIAT is an unknown data set and we were concerned about its quality, the PI's obtained a small seed grant and purchased data for the first quarter of 2000 for the purpose of preliminary testing. The PI's added bilateral business travel to a standard cross-sectional gravity model of bilateral U.S. trade. If bilateral business travel had no explanatory power it would augur poorly for the usefulness of the full SIAT data set. In fact, the PI's found that bilateral business travel has a strong positive association with both U.S. bilateral exports and bilateral imports, especially the former. These preliminary results are a positive indicator for the quality of the SIAT data and suggest there is much insight to be gained from use of the complete data set. Broader impacts. The qualitative nature and quantitative importance of informal barriers to international trade remains an important question in international economics. The study will help to gain a better understanding of how informal barriers to trade work and how large they are. By quantifying the extent to which international business travel causes international trade, the study could also help to evaluate the many government programs worldwide that promote business travel for the purpose of creating trade, including trade missions sponsored by the U.S. Department of Commerce.
