Enhancing Trade Through Migration. A Gravity Model of the Network Effect
AbstractWhile trade liberalization has always been the core of common policies, only in very recent years Europe has started to address the challenge of migration in a comprehensive way. Conventional wisdom considers potential gains from liberalizing trade much higher for European countries than the benefits deriving from liberalization of migration. This paper gives evidence of the benefits European host countries had from immigration, identifying trade channel as the key driver of these benefits. It focuses on 17 European Union member states and 10 extra-European partners with the highest immigration flows towards the EU-27. The period considered is the decade 1997-2006. Controlling for endogeneity, the results I obtain suggest that migration have a statistically significant and robust enhancing effect on European countries exports, this effect being particularly important when considering differentiated commodities rather than homogeneous goods. This confirms the importance of the “network effect” of migration for European countries. Evidence on imports, instead, is puzzled. To my knowledge this is the first attempt in the literature to test the trade enhancing effect of migration using a panel, including a consistent number of European Countries and extra-European partner quite different in terms of geographical location, socio-economics and cultural characteristics and inspecting such recent years. This further extends existing evidence on the network effect and allows considering the results valid in a cross-country analysis over time.
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Bibliographic InfoPaper provided by ISLA, Centre for research on Latin American Studies and Transition Economies, Universita' Bocconi, Milano, Italy in its series ISLA Working Papers with number 35.
Length: 33 pages
Date of creation: Oct 2009
Date of revision:
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International Migration; Economic Integration; Networks; Europe.;
Find related papers by JEL classification:
- F15 - International Economics - - Trade - - - Economic Integration
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-11-07 (All new papers)
- NEP-EEC-2009-11-07 (European Economics)
- NEP-INT-2009-11-07 (International Trade)
- NEP-MIG-2009-11-07 (Economics of Human Migration)
- NEP-NET-2009-11-07 (Network Economics)
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