Economist Jennifer Poole addressed the importance of face-to-face meetings for international trade at the American Economics Association's annual meeting held in Atlanta Jan. 3-5.

An assistant professor in the department of economics at the University of California, Santa Cruz, Dr. Poole’s presentation underscored the importance of business and social networks in generating trade.

GlobalAtlanta conducted the following interview with her by email.

GlobalAtlanta: Your research has focused on the relationship between the development of business and social networks internationally and increased exports.

Please describe your research and how you became interested in this study?

Dr. Poole: My broad research interests as an economist include how interactions between individuals help to transfer information in order to enhance trade and investment opportunities.

Some of my other work investigates how inter-firm worker mobility can transfer knowledge between multinational and domestic firms ultimately increasing domestic workers’ wage outcomes.

In this paper, “Business Travel as an Input to International Trade,” I investigate how business travel, as a form of face-to-face communication, is used to enhance international trade between countries. I began work on this topic after having studied the impact of business and social networks and communication on international trade.

International business travel is an effective way to communicate and to facilitate business networks. I was motivated to empirically evaluate the many U.S. Department of Commerce export promotion programs, which require and subsidize international travel.

GlobalAtlanta: In what ways can face-to-face meetings improve business relationships?

Dr. Poole: Communication helps to break down informational barriers. For example, buyers can learn about the product and suppliers can learn about the market. Similarly, having well-established transnational business and social networks can help to match buyers and suppliers and can help with informal contracting where formal contracts are not easily enforced. Face-to-face meetings facilitate the build-up and maintenance of these international business and social networks.

GlobalAtlanta: Is it possible that such meetings harm relationships? For instance, can’t misunderstandings stem from a face-to-face relationship?

Dr. Poole: Sure, there could be instances where cultural or linguistic misunderstandings occur. However, my work emphasizes that, on average, face-to-face meetings benefit U.S. exporters. In fact, the benefits for face-to-face communication to increase U.S. exports are greater with non-English speaking travelers. This suggests that significant language barriers may remain in other forms of communication, such as the telephone and Internet, and face-to-face communication helps to overcome these language barriers.

GlobalAtlanta: How do visa programs affect the development of business relationships?

Dr. Poole: My work does not directly address this question.

I attempt to understand how business travel is used to create new export relationships.

This becomes a tricky problem to analyze because businesspeople from countries that trade a lot with the U.S. will later travel a lot to the U.S. as well (e.g., for after-sales support). That said, I use the unanticipated shock to international travel around Sept.11, which differentially affected individuals requiring a visa to enter the U.S. and those not requiring a visa, in order to say that business travel causes exports rather than simply that business travel and exports move together.

GlobalAtlanta: Are the findings of your research similar for businesspeople from other countries coming to the U.S. as well as U.S.businesspeople traveling abroad?

Dr. Poole: The most robust findings of the paper support non-resident travel to the U.S. as creating U.S. export opportunities. I do not find equal support for U.S. resident travel abroad also creating U.S. exports.

GlobalAtlanta: Do your findings relate to both men and women?

Dr. Poole: I would be very interested to discern my results by the gender of the traveler, as well as by other demographic characteristics of the traveler. Unfortunately, the data available to me from the Department of Commerce do not distinguish many traveler characteristics. 

Using information on the traveler’s occupation, I argue that higher-skilled travelers (those travelers in professional and managerial occupations) are better able to transfer information about profitable trading opportunities. 

In future research, I intend to use information on the traveler’s country of birth in combination with the traveler’s country of residence to investigate immigrants’ impact on international trade through their travels back to their home countries.

GlobalAtlanta: What variances did you find for representatives of different businesses and/or professions? For instance, did your research find differences in results for service providers such as accountants or attorneys and representatives of a manufacturing firm?

Dr. Poole: While I think this is a very interesting question, and I also would like to know the answer, unfortunately, as with the fifth question, I do not have data on the industry in which the traveler works to match with the trade data.  With rough information on the occupational classifications of travelers, however, the results strongly point to higher-skilled travelers as better able to convey profitable trading opportunities.

GlobalAtlanta: Do your conclusions apply to most areas of the world or have you noticed differences: for instance, between businesspeople traveling to Africa and the Middle East?

Until now, my research has a global focus, except that, as I mentioned in my response to the second question, business travel with residents from non-English speaking countries is more effective at creating U.S. exports.

GlobalAtlanta: How should your findings influence U.S. commercial policy?

Dr. Poole: My results provide support for Department of Commerce export promotion programs, like the International Buyer Program, designed to bring prospective importers to the U.S. for trade shows in order to facilitate buyer-supplier trade matchmaking.

GlobalAtlanta: Do you think that your findings should influence U.S. security policy? If so, in what ways?

Dr. Poole: No. 

GlobalAtlanta: Are you planning to conduct any related research in the near future?

Dr. Poole: Yes. 

I have a related project on how face-to-face communication, as identified by international business travel, enhances the diffusion of technology internationally.

Research stresses the importance of high-tech trade and foreign direct investment as key channels for the diffusion of technology across international borders.

However, despite declining transportation costs, trade costs, and computing and information costs, there still does not appear to be any global source of technology.

A common explanation is the tacit nature of technology. That knowledge and technology have tacit elements suggests knowledge transfer and technology diffusion are most likely to pass through face-to-face communication.

In this project, I investigate whether face-to-face communication enhances the diffusion of technology embodied in cross-border investment flows.

Dr. Poole received her doctorate in economics from the University of California, San Diego, in La Jolla, Calif., in 2007. The title of her dissertation was “Mobility and Information Flows in International Trade and Investment.”

Her major fields of interest are international trade, applied microeconomics and Latin American development issues.

She may be reached by calling (831) 459-5397 or by email at jpoole@ucsc.edu

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