IDEAS home Printed from https://ideas.repec.org/p/csl/devewp/255.html
   My bibliography  Save this paper

Brain Drain with FDI Gain? Factor Mobility between Eastern and Western Europe

Author

Listed:
  • Gianfranco De Simone

    (University of Milan and Centro Studi Luca d\'Agliano)

  • Miriam Manchin

    (University College London and Centro Studi Luca d\'Agliano)

Abstract

A growing strand of literature highlights that skilled migration may favour growth-enhancing technology transfer, trade and foreign direct investments between the source and the host economies of migrants (network effects). We explore a specific channel through which the possible \"diaspora externality\" associated with the current emigration of both poorly and highly educated workers may occur: the removal of informational, cultural and reputational barriers that could prevent firms of high-income countries from investing in the low-income immigrants’ economies of origin. By means of a straightforward gravity specification, we take a fragmentation and multinational production model in the fashion of Venables (1999) to the data. The focus is on the mobility of capital and workers between the advanced European Union countries (EU15) and New Member States (NMS) in the 1994-2005 period. The evidence points to a significant correlation between the volume of EU15’s activities in NMS and the total stock of NMS’ own-migrants in the EU15 economies. Furthermore, the larger is the share of skilled workers in the total emigration stock the larger is the inward FDI flow.

Suggested Citation

  • Gianfranco De Simone & Miriam Manchin, 2008. "Brain Drain with FDI Gain? Factor Mobility between Eastern and Western Europe," Development Working Papers 255, Centro Studi Luca d'Agliano, University of Milano.
    • Handle: RePEc:csl:devewp:255
    Note: Skilled Migration, Brain Drain, FDI, Offshoring, Multinational firms, Fragmentation of Production, Informational Barriers, Network Effects, Diaspora Externality, Gravity Model
    as

    Download full text from publisher

    File URL: https://www.dagliano.unimi.it/media/wp2008_255.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Kugler, Maurice & Rapoport, Hillel, 2005. "Skilled emigration, business networks and foreign direct investment," Discussion Paper Series In Economics And Econometrics 0503, Economics Division, School of Social Sciences, University of Southampton.
    2. Head, Keith & Ries, John & Swenson, Deborah, 1995. "Agglomeration benefits and location choice: Evidence from Japanese manufacturing investments in the United States," Journal of International Economics, Elsevier, vol. 38(3-4), pages 223-247, May.
    3. Frédéric Docquier & Elisabetta Lodigiani, 2010. "Skilled Migration and Business Networks," Open Economies Review, Springer, vol. 21(4), pages 565-588, September.
    4. Jörn Kleinert & Farid Toubal, 2010. "Gravity for FDI," Review of International Economics, Wiley Blackwell, vol. 18(1), pages 1-13, February.
    5. Gandal, Neil & Hanson, Gordon H. & Slaughter, M.J.Matthew J., 2004. "Technology, trade, and adjustment to immigration in Israel," European Economic Review, Elsevier, vol. 48(2), pages 403-428, April.
    6. Yuko Kinoshita & Ashoka Mody, 2001. "Private information for foreign investment in emerging economies," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 34(2), pages 448-464, May.
    7. Redding, Stephen & Venables, Anthony J., 2004. "Economic geography and international inequality," Journal of International Economics, Elsevier, vol. 62(1), pages 53-82, January.
    8. Maurice Kugler & Hillel Rapoport, 2005. "Skilled Emigration, Business Networks and Foreign Direct Investment," CESifo Working Paper Series 1455, CESifo.
    9. John H Dunning, 1998. "Location and the Multinational Enterprise: A Neglected Factor?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 29(1), pages 45-66, March.
    10. Libertad González & Francesc Ortega, 2008. "How Do Very Open Economies Absorb Large Immigration Flows? Recent Evidence from Spanish Regions," Economic Reports 06-08, FEDEA.
    11. Combes, Pierre-Philippe & Lafourcade, Miren & Mayer, Thierry, 2005. "The trade-creating effects of business and social networks: evidence from France," Journal of International Economics, Elsevier, vol. 66(1), pages 1-29, May.
    12. Gould, David M, 1994. "Immigrant Links to the Home Country: Empirical Implications for U.S. Bilateral Trade Flows," The Review of Economics and Statistics, MIT Press, vol. 76(2), pages 302-316, May.
    13. Keith Head & John Ries, 1998. "Immigration and Trade Creation: Econometric Evidence from Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 31(1), pages 47-62, February.
    14. Tito Boeri & Herbert Brücker, 2005. "Why are Europeans so tough on migrants? [‘What a difference a constant makes: how predictable are international migration flows?’ in OECD]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 20(44), pages 630-703.
    15. Borjas, George J, 1999. "Immigration and Welfare Magnets," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages 607-637, October.
    16. De Giorgi, Giacomo & Pellizzari, Michele, 2009. "Welfare migration in Europe," Labour Economics, Elsevier, vol. 16(4), pages 353-363, August.
    17. Maurice Kugler & Hillel Rapoport, 2005. "Skilled Emigration, Business Networks and Foreign Direct Investment," CESifo Working Paper Series 1455, CESifo Group Munich.
    18. Robert E.B. Lucas, 2005. "International Migration and Economic Development," Books, Edward Elgar Publishing, number 3826.
    19. Canfei He, 2002. "Information costs, agglomeration economies and the location of foreign direct investment in China1," Regional Studies, Taylor & Francis Journals, vol. 36(9), pages 1029-1036.
    20. Yuko Kinoshita & Ashoka Mody, 2001. "Private information for foreign investment in emerging economies," Canadian Journal of Economics, Canadian Economics Association, vol. 34(2), pages 448-464, May.
    21. Terra McKinnish, 2005. "Importing the Poor: Welfare Magnetism and Cross-Border Welfare Migration," Journal of Human Resources, University of Wisconsin Press, vol. 40(1).
    22. Venables, Anthony J., 1999. "Fragmentation and multinational production," European Economic Review, Elsevier, vol. 43(4-6), pages 935-945, April.
    23. James E. Rauch & Vitor Trindade, 2002. "Ethnic Chinese Networks In International Trade," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 116-130, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Werner Hölzl, 2010. "Die volkswirtschaftliche Bedeutung des Bildungsexports. Qualitative Evidenz und wirtschaftspolitische Bedeutung," WIFO Studies, WIFO, number 47242, Juni.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marina Murat & Barbara Pistoresi & Alberto Rinaldi, 2008. "Italian Diaspora and Foreign Direct Investment: A Cliometric Perspective," Center for Economic Research (RECent) 013, University of Modena and Reggio E., Dept. of Economics "Marco Biagi".
    2. Marcus H. Böhme & Sarah Kups, 2017. "The economic effects of labour immigration in developing countries: A literature review," OECD Development Centre Working Papers 335, OECD Publishing.
    3. Marina Murat & Sara Flisi, 2007. "Migrant Business Networks and FDI," Center for Economic Research (RECent) 002, University of Modena and Reggio E., Dept. of Economics "Marco Biagi".
    4. Javorcik, Beata S. & Özden, Çaglar & Spatareanu, Mariana & Neagu, Cristina, 2011. "Migrant networks and foreign direct investment," Journal of Development Economics, Elsevier, vol. 94(2), pages 231-241, March.
    5. Tian, Yuan & Caballero, Maria Esther & Kovak, Brian K., 2022. "Social learning along international migrant networks," Journal of Economic Behavior & Organization, Elsevier, vol. 195(C), pages 103-121.
    6. Joel OUDINET, 2021. "Introduction - L’impact de la migration sur le développement inclusif," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 53, pages 5-21.
    7. Artjoms IVLEVS & Jaime DE MELO, 2015. "FDI, the Brain Drain and Trade: Channels and Evidence," World Scientific Book Chapters, in: Developing Countries in the World Economy, chapter 21, pages 533-551, World Scientific Publishing Co. Pte. Ltd..
    8. Sonia Plaza, 2013. "Diaspora resources and policies," Chapters, in: Amelie F. Constant & Klaus F. Zimmermann (ed.), International Handbook on the Economics of Migration, chapter 27, pages 505-529, Edward Elgar Publishing.
    9. Jasmin Katrin Gröschl, 2013. "Gravity Model Applications and Macroeconomic Perspectives," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 48.
    10. Boly, Amadou & Coniglio, Nicola Daniele & Prota, Francesco & Seric, Adnan, 2014. "Diaspora Investments and Firm Export Performance in Selected Sub-Saharan African Countries," World Development, Elsevier, vol. 59(C), pages 422-433.
    11. Joel Oudinet, 2021. "L’impact de la migration sur le développement inclusif," Post-Print hal-04065384, HAL.
    12. Murat, Marina, 2014. "Out of Sight, Not Out of Mind. Education Networks and International Trade," World Development, Elsevier, vol. 58(C), pages 53-66.
    13. TOMOHARA Akinori, 2017. "Do Migrant and Business Networks Promote International Royalty Receipts?," Discussion papers 17006, Research Institute of Economy, Trade and Industry (RIETI).
    14. LSE Enterprise,, 2011. "Study on the impact of the single market on cohesion: implications for cohesion policy, growth and competitiveness," LSE Research Online Documents on Economics 42840, London School of Economics and Political Science, LSE Library.
    15. Peter Huber & Gabriele Tondl, 2012. "Migration and regional convergence in the European Union," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 39(4), pages 439-460, November.
    16. Felbermayr, Gabriel J. & Toubal, Farid, 2012. "Revisiting the Trade-Migration Nexus: Evidence from New OECD Data," World Development, Elsevier, vol. 40(5), pages 928-937.
    17. Flisi, Sara & Murat, Marina, 2011. "The hub continent. Immigrant networks, emigrant diasporas and FDI," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(6), pages 796-805.
    18. Schneider, Lutz & Kubis, Alexander & Wiest, Delia, 2010. "Selektivität, soziale Bindung und räumliche Mobilität –Eine Analyse der Rückkehrpräferenz," IWH Discussion Papers 17/2010, Halle Institute for Economic Research (IWH).
    19. Campbell, Douglas L., 2010. "History, culture, and trade: a dynamic gravity approach," MPRA Paper 24014, University Library of Munich, Germany.
    20. Marina Murat, 2014. "Soft, hard or smart power? International students and investments abroad," Center for Economic Research (RECent) 107, University of Modena and Reggio E., Dept. of Economics "Marco Biagi".

    More about this item

    Keywords

    Skilled Migration; Brain Drain; FDI; Offshoring; Multinational firms; Fragmentation of Production; Informational Barriers; Network Effects; Diaspora Externality; Gravity Model;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:csl:devewp:255. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chiara Elli (email available below). General contact details of provider: https://edirc.repec.org/data/damilit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.