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Do Migrants Really Foster Trade? The Trade-Migration Nexus, a Panel Approach 1960-2000

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  • Christopher Parsons

Abstract

Despite the burgeoning empirical literature providing evidence of a strong and robust positive correlation between trade and migration, doubts persist as to unobserved factors which may be driving this relationship. This paper re-examines the trade-migration nexus using a panel spanning several decades, which comprises the majority of world trade and migration in every decade. First the findings common to the literature are reproduced. Country-pair fixed effects are then used to account for unobserved bilateral factors, the implementation of which removes all of the positive impact of migration on trade. In other words the unobserved factors, a leading candidate for which it is argued is international bilateral ties, are on average strongly and positively correlated with migrant networks. Dividing the world into the relatively affluent North and poorer South, the results show that migrants from either region only affect Northern exports to the South. This is intuitive since in general countries of the North export more differentiated products and information barriers between these regions are greatest. A country-level analysis further shows that migrants may both create and divert trade. Taken as a whole, the results demonstrate the large biases inherent in cross-sectional studies investigating the trade-migration nexus and highlight the extent to which previous results have been overstated.

Suggested Citation

  • Christopher Parsons, "undated". "Do Migrants Really Foster Trade? The Trade-Migration Nexus, a Panel Approach 1960-2000," Discussion Papers 11/10, University of Nottingham, GEP.
  • Handle: RePEc:not:notgep:11/10
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    References listed on IDEAS

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    Cited by:

    1. Murat Genc & Masood Gheasi & Peter Nijkamp & Jacques Poot, 2012. "The impact of immigration on international trade: a meta-analysis," Chapters,in: Migration Impact Assessment, chapter 9, pages 301-337 Edward Elgar Publishing.
    2. Mariya Aleksynska & Giovanni Peri, 2014. "Isolating the Network Effect of Immigrants on Trade," The World Economy, Wiley Blackwell, vol. 37(3), pages 434-455, March.
    3. Felbermayr, Gabriel & Grossmann, Volker & Kohler, Wilhelm, 2012. "Migration, International Trade and Capital Formation: Cause or Effect ?," FSES Working Papers 436, Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland.
    4. Lücke, Matthias & Stöhr, Tobias, 2015. "Heterogeneous immigrants and foreign direct investment: The role of language skills," Kiel Working Papers 2009, Kiel Institute for the World Economy (IfW).
    5. Jonathan Timmis, "undated". "The Internet and International Trade in Goods," Discussion Papers 12/08, University of Nottingham, GEP.
    6. Hélène Ehrhart & Maëlan Le Goff & Emmanuel Rocher & Raju Jan Singh, 2012. "Does Migration Foster Exports? An African Perspective," Working Papers 2012-38, CEPII research center.
    7. Behncke, Nadine, 2014. "The structure of ethnic networks and exports: Evidence from Germany," Center for European, Governance and Economic Development Research Discussion Papers 198, University of Goettingen, Department of Economics.
    8. Ehrhart, Helene & Le Goff, Maelan & Rocher?, Emmanuel & Singh, Raju Jan, 2014. "Does migration foster exports ? evidence from Africa," Policy Research Working Paper Series 6739, The World Bank.
    9. Ernest Miguelez & Carsten Fink, 2013. "Measuring the International Mobility of Inventors: A New Database," WIPO Economic Research Working Papers 08, World Intellectual Property Organization - Economics and Statistics Division, revised May 2013.
    10. Selim Çagatay & Murat Genç & Onur Koska, 2013. "The Impact of Immigration on International Trade in Europe: The Case of the EU-Mediterranean-Eastern Europe Zone," ERSA conference papers ersa13p376, European Regional Science Association.
    11. repec:wip:wpaper:8 is not listed on IDEAS
    12. Jonathan Timmis, "undated". "The Internet and International Trade in Goods," Discussion Papers 12/03, University of Nottingham, School of Economics.

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