IDEAS home Printed from https://ideas.repec.org/p/ulp/sbbeta/2015-11.html
   My bibliography  Save this paper

Aid, Trade and Migration : How are OECD countries policies connected in times of crisis?

Author

Listed:
  • Aurore Gary
  • Audrey-Rose Menard

Abstract

This paper aims at explaining how aid, trade and migration in developed nations are connected, in particular in times of economics crisis. It relates to a new strand of the aid allocation literature, which aims at determining how donors’ domestic policies and their political environment can delineate bilateral aid allocations. We use a gravity model framework to jointly determine aid, trade and migration between pairs of developed and developing countries as well as their relation to unemployment in OECD nations. Namely, we focus on the core determinants of these policies with the particular aim of determining whether aid, trade, migration and unemployment policies are interdependent or not. We apply a three-stage least squares method on a data set covering 22 Development Assistance Committee (DAC) countries and 153 recipient countries from 2000 and 2010. Our data reveal that not only aid, trade and migration policies affect respectively aid, trade and migration flows but also they affect each other. Likewise, these policies can be substitutes for developed countries unemployment policies.

Suggested Citation

  • Aurore Gary & Audrey-Rose Menard, 2015. "Aid, Trade and Migration : How are OECD countries policies connected in times of crisis?," Working Papers of BETA 2015-11, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  • Handle: RePEc:ulp:sbbeta:2015-11
    as

    Download full text from publisher

    File URL: http://beta.u-strasbg.fr/WP/2015/2015-11.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Pope, David & Withers, Glenn, 1993. "Do Migrants Rob Jobs? Lessons of Australian History, 1861–1991," The Journal of Economic History, Cambridge University Press, vol. 53(4), pages 719-742, December.
    2. Hatton, Tim & Williamson, Jeffrey G., 2002. "What Fundamentals Drive World Migration?," CEPR Discussion Papers 3559, C.E.P.R. Discussion Papers.
    3. Mumtaz Anwar & Katharina Michaelowa, 2006. "The Political Economy of US Aid to Pakistan," Review of Development Economics, Wiley Blackwell, vol. 10(2), pages 195-209, May.
    4. Ekrame Boubtane & Dramane Coulibaly & Christophe Rault, 2013. "Immigration, Growth, and Unemployment: Panel VAR Evidence from OECD Countries," LABOUR, CEIS, vol. 27(4), pages 399-420, December.
    5. O. Damette & V. Fromentin, 2013. "Migration and labour markets in OECD countries: a panel cointegration approach," Applied Economics, Taylor & Francis Journals, vol. 45(16), pages 2295-2304, June.
    6. Robert K. Fleck & Christopher Kilby, 2006. "How Do Political Changes Influence US Bilateral Aid Allocations? Evidence from Panel Data," Review of Development Economics, Wiley Blackwell, vol. 10(2), pages 210-223, May.
    7. Ximena Clark & Timothy J. Hatton & Jeffrey G. Williamson, 2007. "Explaining U.S. Immigration, 1971-1998," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 359-373, May.
    8. Paul Clist & Alessia Isopi & Oliver Morrissey, 2012. "Selectivity on aid modality: Determinants of budget support from multilateral donors," The Review of International Organizations, Springer, vol. 7(3), pages 267-284, September.
    9. Wagner, Don, 2003. "Aid and trade--an empirical study," Journal of the Japanese and International Economies, Elsevier, vol. 17(2), pages 153-173, June.
    10. Knack, Stephen & Smets, Lodewijk, 2013. "Aid Tying and Donor Fragmentation," World Development, Elsevier, vol. 44(C), pages 63-76.
    11. Helen V. Milner & Dustin H. Tingley, 2010. "The Political Economy Of U.S. Foreign Aid: American Legislators And The Domestic Politics Of Aid," Economics and Politics, Wiley Blackwell, vol. 22(2), pages 200-232, July.
    12. Jean-Louis Combes & Christian Hubert Ebeke & Mathilde Maurel & Thierry Urbain Yogo, 2014. "Remittances and Working Poverty," Journal of Development Studies, Taylor & Francis Journals, vol. 50(10), pages 1348-1361, November.
    13. Stijn Claessens & Danny Cassimon & Bjorn Van Campenhout, 2009. "Evidence on Changes in Aid Allocation Criteria," The World Bank Economic Review, World Bank Group, vol. 23(2), pages 185-208, June.
    14. Peter H. Egger & Maximilian von Ehrlich & Douglas R. Nelson, 2012. "Migration and Trade," The World Economy, Wiley Blackwell, vol. 35(2), pages 216-241, February.
    15. Andri Chassamboulli & Theodore Palivos, 2014. "A Search‐Equilibrium Approach To The Effects Of Immigration On Labor Market Outcomes," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55(1), pages 111-129, February.
    16. Rauch, James E., 1999. "Networks versus markets in international trade," Journal of International Economics, Elsevier, vol. 48(1), pages 7-35, June.
    17. James E. Rauch & Alessandra Casella, 2003. "Overcoming Informational Barriers to International Resource Allocation: Prices and Ties," Economic Journal, Royal Economic Society, vol. 113(484), pages 21-42, January.
    18. repec:hal:journl:halshs-01167226 is not listed on IDEAS
    19. Jean, Sébastien & Jiménez, Miguel, 2011. "The unemployment impact of immigration in OECD countries," European Journal of Political Economy, Elsevier, vol. 27(2), pages 241-256, June.
    20. Axel Dreher & Florian Mölders & Peter Nunnenkamp, 2010. "Aid Delivery through Non‐governmental Organisations: Does the Aid Channel Matter for the Targeting of Swedish Aid?," The World Economy, Wiley Blackwell, vol. 33(2), pages 147-176, February.
    21. Faini, Riccardo & Venturini, Alessandra, 1993. "Trade, aid and migrations: Some basic policy issues," European Economic Review, Elsevier, vol. 37(2-3), pages 435-442, April.
    22. Carrere, Celine, 2006. "Revisiting the effects of regional trade agreements on trade flows with proper specification of the gravity model," European Economic Review, Elsevier, vol. 50(2), pages 223-247, February.
    23. David de la Croix & Clara Delavallade, 2014. "Why corrupt governments may receive more foreign aid," Oxford Economic Papers, Oxford University Press, vol. 66(1), pages 51-66, January.
    24. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    25. Lahiri, Sajal & Raimondos-Moller, Pascalis, 2000. "Lobbying by Ethnic Groups and Aid Allocation," Economic Journal, Royal Economic Society, vol. 110(462), pages 62-79, March.
    26. Canavire-Bacarreza, Gustavo & Nunnenkamp, Peter & Thiele, Rainer & Triveño, Luis, 2005. "Assessing the allocation of aid: Developmental concerns and the self-interest of donors," Kiel Working Papers 1253, Kiel Institute for the World Economy (IfW Kiel).
    27. Berthélemy, Jean-Claude & Beuran, Monica & Maurel, Mathilde, 2009. "Aid and Migration: Substitutes or Complements?," World Development, Elsevier, vol. 37(10), pages 1589-1599, October.
    28. Baier, Scott L. & Bergstrand, Jeffrey H., 2009. "Bonus vetus OLS: A simple method for approximating international trade-cost effects using the gravity equation," Journal of International Economics, Elsevier, vol. 77(1), pages 77-85, February.
    29. L. ALAN WINTERS & NEIL McCULLOCH & ANDREW McKAY, 2015. "Trade Liberalization and Poverty: The Evidence So Far," World Scientific Book Chapters, in: Non-Tariff Barriers, Regionalism and Poverty Essays in Applied International Trade Analysis, chapter 14, pages 271-314, World Scientific Publishing Co. Pte. Ltd..
    30. Giovanni Peri & Francisco Requena‐Silvente, 2010. "The trade creation effect of immigrants: evidence from the remarkable case of Spain," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 43(4), pages 1433-1459, November.
    31. Bulír, Ales & Hamann, A. Javier, 2008. "Volatility of Development Aid: From the Frying Pan into the Fire?," World Development, Elsevier, vol. 36(10), pages 2048-2066, October.
    32. Younas, Javed, 2008. "Motivation for bilateral aid allocation: Altruism or trade benefits," European Journal of Political Economy, Elsevier, vol. 24(3), pages 661-674, September.
    33. Wagner, Don & Head, Keith & Ries, John, 2002. "Immigration and the Trade of Provinces," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(5), pages 507-525, December.
    34. Pedersen, Peder J. & Pytlikova, Mariola & Smith, Nina, 2008. "Selection and network effects--Migration flows into OECD countries 1990-2000," European Economic Review, Elsevier, vol. 52(7), pages 1160-1186, October.
    35. Dollar, David & Levin, Victoria, 2006. "The Increasing Selectivity of Foreign Aid, 1984-2003," World Development, Elsevier, vol. 34(12), pages 2034-2046, December.
    36. Angelucci, Manuela, 2004. "Aid and Migration: An Analysis of the Impact of Progresa on the Timing and Size of Labour Migration," IZA Discussion Papers 1187, Institute of Labor Economics (IZA).
    37. Billor, Nedret & Hadi, Ali S. & Velleman, Paul F., 2000. "BACON: blocked adaptive computationally efficient outlier nominators," Computational Statistics & Data Analysis, Elsevier, vol. 34(3), pages 279-298, September.
    38. 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.
    39. 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.
    40. 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.
    41. Felbermayr, Gabriel J. & Jung, Benjamin, 2009. "The pro-trade effect of the brain drain: Sorting out confounding factors," Economics Letters, Elsevier, vol. 104(2), pages 72-75, August.
    42. Don Wagner & Keith Head & John Ries, 2002. "Immigration and the Trade of Provinces," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(5), pages 507-525, November.
    43. Tingley, Dustin, 2010. "Donors and domestic politics: Political influences on foreign aid effort," The Quarterly Review of Economics and Finance, Elsevier, vol. 50(1), pages 40-49, February.
    44. Erik Lundsgaarde & Christian Breunig & Aseem Prakash, 2007. "Trade versus aid: donor generosity in an era of globalization," Policy Sciences, Springer;Society of Policy Sciences, vol. 40(2), pages 157-179, June.
    45. Kusum Mundra, 2005. "Immigration and International Trade: A Semiparametric Empirical Investigation," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 14(1), pages 65-91.
    46. Jean-Louis Combes & Christian Hubert Ebeke & Mathilde Maurel & Thierry Urbain Yogo, 2014. "Remittances and Working Poverty," Journal of Development Studies, Taylor & Francis Journals, vol. 50(10), pages 1348-1361, November.
    47. Campaniello, Nadia, 2014. "The causal effect of trade on migration: Evidence from countries of the Euro-Mediterranean partnership," Labour Economics, Elsevier, vol. 30(C), pages 223-233.
    48. Trumbull, William N & Wall, Howard J, 1994. "Estimating Aid-Allocation Criteria with Panel Data," Economic Journal, Royal Economic Society, vol. 104(425), pages 876-882, July.
    49. Asadul Islam, 2007. "Immigration Unemployment Relationship: The Evidence From Canada," Australian Economic Papers, Wiley Blackwell, vol. 46(1), pages 52-66, March.
    Full references (including those not matched with items on IDEAS)

    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. Egger, Peter H. & Ehrlich, Maximilian v. & Nelson, Douglas R., 2020. "The trade effects of skilled versus unskilled migration," Journal of Comparative Economics, Elsevier, vol. 48(2), pages 448-464.
    2. Christopher R. Parsons & L. Alan Winters, 2014. "International migration, trade and aid: a survey," Chapters, in: Robert E.B. Lucas (ed.), International Handbook on Migration and Economic Development, chapter 4, pages 65-112, Edward Elgar Publishing.
    3. Felbermayr, Gabriel & Grossmann, Volker & Kohler, Wilhelm, 2012. "Migration, International Trade and Capital Formation: Cause or Effect?," IZA Discussion Papers 6975, Institute of Labor Economics (IZA).
    4. Walter Steingress, 2018. "The causal impact of migration on US trade: Evidence from political refugees," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 51(4), pages 1312-1338, November.
    5. Giorgia Giovannetti & Mauro Lonati, 2014. "The impact of product quality on the pro-trade elasticity of immigrants," Working Papers - Economics wp2014_11.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    6. Hatzigeorgiou, Andreas & Lodefalk, Magnus, 2017. "Anti-Migration as a Threat to Internationalization?," Ratio Working Papers 302, The Ratio Institute.
    7. Noel Gaston & Douglas R. Nelson, 2013. "Bridging Trade Theory And Labour Econometrics: The Effects Of International Migration," Journal of Economic Surveys, Wiley Blackwell, vol. 27(1), pages 98-139, February.
    8. 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.
    9. 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.
    10. Anthony Briant & Pierre-Philippe Combes & Miren Lafourcade, 2014. "Product Complexity, Quality of Institutions and the Protrade Effect of Immigrants," The World Economy, Wiley Blackwell, vol. 37(1), pages 63-85, January.
    11. Rudolph, Alexandra, 2017. "The concept of SDG-sensitive development cooperation: implications for OECD-DAC members," IDOS Discussion Papers 1/2017, German Institute of Development and Sustainability (IDOS).
    12. repec:hal:spmain:info:hdl:2441/781v6i5nuc9v6okbq7i1iqqsk1 is not listed on IDEAS
    13. Giorgia Giovannetti & Mauro Lanati, 2017. "Do High-Skill Immigrants trigger High-Quality Trade?," The World Economy, Wiley Blackwell, vol. 40(7), pages 1345-1380, July.
    14. Marina Murat, 2013. "Education ties and investments abroad. Empirical evidence from the US and UK," Department of Economics (DEMB) 0014, University of Modena and Reggio Emilia, Department of Economics "Marco Biagi".
    15. Rosmaiza A. Ghani & Michael P. Cameron & William Cochrane & Matthew Roskruge, 2019. "A Gravity Model Estimation of the Bi-Directional Relationship between International Trade and Migration," Working Papers in Economics 19/02, University of Waikato.
    16. 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.
    17. Giulia BETTIN & Alessia LO TURCO, 2009. "A Cross Country View On South-North Migration And Trade," Working Papers 331, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    18. Gianluca Orefice, 2015. "International migration and trade agreements: The new role of PTAs," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 48(1), pages 310-334, February.
    19. 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).
    20. 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.
    21. Giulia Bettin & Alessia Lo Turco, 2012. "A Cross-Country View on South-North Migration and Trade: Dissecting the Channels," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 48(4), pages 4-29, July.

    More about this item

    Keywords

    Foreign aid; Trade; Migration.;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:ulp:sbbeta:2015-11. 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: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/bestrfr.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.