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Migrant networks and foreign direct investment

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  • Javorcik, Beata S.
  • Ozden, Caglar
  • Spatareanu, Mariana
  • Neagu, Cristina

Abstract

While there exists sizeable literature documenting the importance of ethnic networks for international trade, little attention has been devoted to studying the effects of networks on foreign direct investment (FDI). The existence of ethnic networks may positively affect FDI by promoting information flows across international borders and by serving as a contract enforcement mechanism. This paper investigates the link between the presence of migrants in the United States and U.S. FDI in the migrants'countries of origin, taking into account the potential endogeneity concerns. The results suggest that U.S. FDI abroad is positively correlated with the presence of migrants from the host country. The data further indicate that the relationship between FDI and migration is driven by the presence of migrants with a college education.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4046.

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Date of creation: 01 Nov 2006
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Handle: RePEc:wbk:wbrwps:4046

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Keywords: Population Policies; Economic Theory&Research; Voluntary and Involuntary Resettlement; Anthropology; Human Migrations&Resettlements;

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  1. Migration and Development: Who Bears the Burden of Proof? Justin Sandefur replies to Paul Collier
    by Duncan Green in From Poverty to Power on 2014-03-19 07:30:52
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