The link between immigration and trade in developing countries
International trade can foster economic development. This paper examines the link between immigration from developing countries to OECD countries and their bilateral trade; it also explores some possible mechanism behind this link. It uses a gravity equation for trade augmented by an immigrant stock variable and a set of control variables. The immigrants’ variable enters the estimated equation in different ways depending on immigrants’ relevant characteristics both individual and non individual-specific. Results show that in developing countries there is a positive link between immigration and both exports and imports. We find evidence for the trade transaction cost channel but not for the preference one. We identify the social or ethnic network effect as the mechanism behind this link since immigrants related to business activities are the ones who have a positive effect on bilateral trade.
|Date of creation:||Oct 2010|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.aeefi.com|
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:aee:wpaper:1007. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jose L. Torres)
If references are entirely missing, you can add them using this form.