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Immigration and Trade in Portugal: A Static and Dynamic Panel Data Analysis

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  • Horácio C. Faustino
  • Nuno Carlos Leitão

Abstract

This article tests the relation between immigration and Portuguese bilateral trade, considering the fifteen European partners (EU15). Using a static and dynamic panel data analysis, the results show that the stock of immigrants has a positive effect on Portuguese exports, imports and bilateral intra-industry trade. These results suggest that immigration affects all types of trade in a positive way. The underlying assumption is that immigration contributes to decrease the costs of transactions, which in turn promotes all trade flows. The static and dynamic results do not confirm the hypothesis of a negative effect of immigration on Portuguese exports. In the static model, a 10% increase in immigration induces a 5.98 % increase in exports and a 5.55% increase in imports. The effect on the Portuguese trade balance is positive. However, the dynamic results for the export and import equations are more reliable, showing a smaller positive effect on exports. A 10% increase in bilateral immigration induces a 0.47% and 2.34% increase in exports and imports, respectively. Our findings also suggest that when immigrants to Portugal originate from a Latin partner-country, the effects on trade are stronger than in the case of immigrants from non-Latin countries. The study is based on an extended gravitational model, in order to incorporate the qualitative factors as control variables.

Suggested Citation

  • Horácio C. Faustino & Nuno Carlos Leitão, 2008. "Immigration and Trade in Portugal: A Static and Dynamic Panel Data Analysis," Working Papers Department of Economics 2008/31, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    • Handle: RePEc:ise:isegwp:wp312008
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    Cited by:

    1. 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.
    2. 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.
    3. Mahmut Yasar & David Lisner & Roderick Rejesus, 2012. "Bilateral trade impacts of temporary foreign visitor policy," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(3), pages 501-521, September.
    4. Horácio Faustino & Isabel Proença, 2011. "Effects of Immigration on Intra-Industry Trade: A logit analysis," Working Papers Department of Economics 2011/19, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    5. 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.
    6. A. James Wynne & Chandrashekar Challa & John Palesis & Bernie Farkas, 2015. "A Conceptual Model: Impact Of Usage Of Social Media Tools To Enhance Project Management Success," Portuguese Journal of Management Studies, ISEG, Universidade de Lisboa, vol. 0(2), pages 55-72.
    7. 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.
    8. 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.
    9. Horácio C. Faustino & Isabel Proença, 2015. "Immigration And Intra-Industry Trade: The Relevance Of Language, Qualification And Economic Integration," Portuguese Journal of Management Studies, ISEG, Universidade de Lisboa, vol. 0(1), pages 3-18.
    10. Nuno Carlos Leitão, 2013. "The Impact of Immigration on Portuguese Intra-Industry Trade," Working Papers 2013.20, Fondazione Eni Enrico Mattei.

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    More about this item

    Keywords

    intra-industry trade; immigration; gravity model; panel data; Portugal.;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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