World Economy· 2026Q1
Informal Networks and Crisis Resilience
- 0citations
- Q1SCImago
- 2026year
Short summary
Informal networks like the Commonwealth and Francophonie provide a 'safe-haven' for trade during global uncertainty, increasing trade within these groups by an unstated but significant amount, a resilience not seen in formal trade agreements.
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Key points
- Informal networks (Commonwealth, Francophonie) offer trade resilience during global trade uncertainty.
- Trade within informal networks increases during uncertainty, unlike with formal agreements.
- The 'safe-haven' effect is concentrated at the intensive margin (existing trade relationships).
- This resilience is particularly beneficial for low-income countries.
AI-generated from the title and abstract; the full text is not read.
Abstract
ABSTRACT Do informal networks provide resilience to trade in times of crises and rising trade policy uncertainty? We address this question by examining the effects of Commonwealth and Francophonie membership, two prominent examples of informal networks, on cross‐border trade in goods in a structural gravity framework over 2000–2019. Our results show that Commonwealth and Francophonie members trade more within these networks during episodes of global trade uncertainty, a finding not observed for participants of formal trade agreements. The ‘safe‐haven’ effect of informal networks is concentrated at the intensive margin; found to be salient for low‐income countries; but not observed for high‐quality exports, high‐institutional quality countries, and non‐relational goods like agricultural products. This suggests that shared cultural, linguistic, and legal norms in informal networks substitute formal institutional mechanisms and facilitate relational contracting during crises that enable trade resilience. Our findings are especially relevant for LDCs, impacted by US ‘reciprocal’ tariffs and their induced trade policy uncertainty.
The authors' abstract, as published at the source. World Economy, 2026 · DOI ↗
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General Economics, Econometrics and FinanceEconomics, Econometrics and Finance