Production networks matter for firm growth. However, little is known about what shapes firms’ production networks in developing countries. This column explores the role of community networks in West Bengal in firm-to-firm trade between 2010 and 2016. Firms systematically trade more within their caste than they would if trading relationships were randomly chosen, both for firms in large and smaller castes. Being in the same caste doubles the probability that two firms trade and, when they do, increases trade volumes by almost 20%.
Caste networks play a crucial role in shaping economic mobility in India and can either support or hinder mobility, depending on the circumstances