International migration and trade: A comparative analysis of China and India

This paper re-examines the trade impact of emigrants from China and India, two of the largest countries in both global trade and emigration, by addressing methodological limitations in the existing literature and expanding the analysis through disaggregation by product categories and destination types. Using a structural gravity model estimated via Poisson Pseudo Maximum Likelihood (PPML), the study analyses both exports and imports, disaggregated by stages of processing. It draws on bilateral trade data from CEPII and WITS and migrant stock data from the United Nations (1990–2020). Contrary to prior studies, the results do not support a pro-export effect of emigrants from either country at the aggregate level, suggesting earlier findings may reflect methodological biases. However, Indian emigrants are positively associated with exports of consumer and capital goods, while Chinese emigrants show no significant effects across categories. Disaggregation by destination reveals that emigrants in developed countries are more strongly linked to trade-substituting dynamics, potentially reflecting roles in production relocation or import substitution. In contrast, Indian emigrants in developing destinations appear more pro-trade, operating through preference and information channels that ease access to foreign markets and technologies. The null aggregate effects underscore the importance of methodological rigor and suggest a need for targeted policy efforts to harness emigrant networks more effectively. Disaggregated evidence offers more nuanced insights to guide such strategies.