Does trade creation by social and business networks hold in services? An analysis for Accommodation and Restaurants in Spain

Recent literature on the border effect fostered research on informal barriers to trade and the role of networks promoting it. In relation to social networks, it has been shown that the intensity of trade of goods is positively correlated with the migration flows between any pair of countries/regions. In this article it is investigated if such a relation also holds for the Spanish domestic trade flows of services. With this aim, a gravity model rooted in the Dixit–Stiglitz–Krugman theoretical frameworks is used taking advantage of a unique dataset on interregional trade flows of some of the main sectors linked to Tourism, namely, Accommodation and Restaurants. A different analysis of each sector separately is carried out, finding a big positive effect for Restaurants, but no effect for the Hostel industry. These novel results can be explained by forces driving the demand in each sector. Migration linkages are measured by means of Register data, regarding the stock of people born in each region living in the others. Business networks are approached by a matrix of companies in different regions operating in these key sectors that are connected.