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The Impact of Migration on Foreign Trade: A Developing Country Approach

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  • Canavire Bacarreza, Gustavo Javier
  • Ehrlich, Laura

Abstract

While the causal relationship between migration and trade has not been studied thoroughly, estimation results of gravity model approach suggest that important aspects determining trade volumes can be missed if additional factors, including migration, are not considered. The current paper aims at testing the impact of migration on foreign trade in a relatively closed small economy. We use the data of Bolivia, for the years 1990–2003. We apply gravity model, adding a migration variable to the explanatory variables. We test the impact of both, immigration and emigration on exports and imports and also on intra-industry trade. We use panel estimation including data of 30 trade partners (selected according to higher trade intensity with Bolivia). We control for the economic size and geographical location of trade partners, and for changes in terms of trade. Previous studies show an increasing effect of immigration on both exports and imports elasticities. Some studies find larger exports elasticity compared to imports elasticity, some vice versa. We could not find any studies on emigration impact on trade. Our results show relatively similar impact of both immigration and emigration on foreign trade. Positive significant effect of immigration on exports and imports is confirmed also in Bolivia, even when the migration flows in Bolivia are not as high as in the case of most countries analyzed previously. We can conclude positive effect of migration flows also on intra-industry trade. In the following analysis, we intend to control for the impact of trade agreements and openness of trade partners. We will also try to broaden the sample of trade partners used in the current estimation and to test the hypotheses on other developing countries.

Suggested Citation

  • Canavire Bacarreza, Gustavo Javier & Ehrlich, Laura, 2006. "The Impact of Migration on Foreign Trade: A Developing Country Approach," MPRA Paper 1090, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:1090
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    References listed on IDEAS

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    Cited by:

    1. Hatzigeorgiou, Andreas & Lodefalk, Magnus, 2018. "Anti-Migration as a Threat to Internationalization? A Review of the Migration-Internationalization Literature," GLO Discussion Paper Series 287, Global Labor Organization (GLO).
    2. Andreas Hatzigeorgiou & Magnus Lodefalk, 2015. "Trade, Migration and Integration – Evidence and Policy Implications," The World Economy, Wiley Blackwell, vol. 38(12), pages 2013-2048, December.
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    4. Insel, Aysu & Sungur Cakmak, Nesrin, 2010. "The Impacts of the Turkish Emigrants on Turkish Exports and Imports in Europe," MPRA Paper 22100, University Library of Munich, Germany, revised 30 Apr 2010.
    5. Murat Genc & Masood Gheasi & Peter Nijkamp & Jacques Poot, 2012. "The impact of immigration on international trade: a meta-analysis," Chapters, in: Peter Nijkamp & Jacques Poot & Mediha Sahin (ed.), Migration Impact Assessment, chapter 9, pages 301-337, Edward Elgar Publishing.
    6. Hatzigeorgiou Andreas, 2010. "Migration as Trade Facilitation: Assessing the Links between International Trade and Migration," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-35, March.
    7. Kadir KARAGÖZ, 2016. "Migration – trade nexus revisited: Empirical evidence from Turkish emigrants in OECD countries," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(609), W), pages 127-142, Winter.
    8. Ghosh, Sucharita & Enami, Ali, 2015. "Do refugee-immigrants affect international trade? Evidence from the world's largest refugee case," Journal of Policy Modeling, Elsevier, vol. 37(2), pages 291-307.
    9. Cristina Terra & Tania El Kallab, 2014. "French Colonial Trade Patterns: European Settlement," THEMA Working Papers 2014-27, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    10. Hatzigeorgiou, Andreas & Lodefalk, Magnus, 2017. "Anti-Migration as a Threat to Internationalization?," Ratio Working Papers 302, The Ratio Institute.
    11. Michael Good, 2013. "Geographic Proximity and the Pro-trade Effect of Migration: State-level Evidence from Mexican Migrants in the United States," 2013 Papers pgo530, Job Market Papers.
    12. Michael Good, 2012. "How Localized is the Pro-trade Effect of Immigration? Evidence from Mexico and the United States," Working Papers 1203, Florida International University, Department of Economics.
    13. Mehak Ejaz & Muhammad Ramzan Sheikh & Rana Zafar Hayat & Neelam Asghar Ali, 2022. "Overseas Labour Migration, Remittances, International Trade and Economic Growth Nexus in Pakistan," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 8(3), pages 166-175, September.
    14. Yang, Xiyan & Lin, Xiaohua, 2022. "Overcoming informal barriers to trade: Immigrant educational attainment vs. network competence," International Business Review, Elsevier, vol. 31(1).
    15. Jacques Poot & Anna Strutt, 2010. "International Trade Agreements and International Migration," The World Economy, Wiley Blackwell, vol. 33(12), pages 1923-1954, December.
    16. Bellino Antonella & Celi Giuseppe, 2016. "The Role of Migration in the Variety and Quality of Trade: Evidence from Germany," German Economic Review, De Gruyter, vol. 17(1), pages 1-25, February.
    17. Hatzigeorgiou, Andreas & Lodefalk, Magnus, 2018. "Do Migrants Facilitate Internationalization? A Review of the Literature," Working Papers 2018:11, Örebro University, School of Business, revised 19 Dec 2019.
    18. BELLINO, Antonella & CELI, Giuseppe, 2016. "The Migration-Trade Nexus in the Presence of Vertical and Horizontal Product Differentiation," CELPE Discussion Papers 137, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    19. Bulawayo, Maio & Mudenda, Dale & Ndulo, Manenga & Simwanza, Charles, 2020. "Does Immigration Stimulate Non-Traditional Exports? Evidence from Zambia," African Journal of Economic Review, African Journal of Economic Review, vol. 8(3), November.
    20. Kadir KARAGÖZ, 2016. "Migration – trade nexus revisited: Empirical evidence from Turkish emigrants in OECD countries," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(609), W), pages 127-142, Winter.
    21. Robert E.B. Lucas, 2014. "The migration–trade link in developing economies: a summary and extension of evidence," Chapters, in: Robert E.B. Lucas (ed.), International Handbook on Migration and Economic Development, chapter 11, pages 288-326, Edward Elgar Publishing.
    22. Roger White & Bedassa Tadesse, 2011. "International Migration and Economic Integration," Books, Edward Elgar Publishing, number 14318.

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    More about this item

    Keywords

    migration; trade; gravity model; Bolivia;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F10 - International Economics - - Trade - - - General

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