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The link between immigration and trade in developing countries

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Author(s)
José Vicente Blanes

Metadatos
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URI
http://hdl.handle.net/20.500.12424/913019
Online Access
http://www.aeefi.com/RePEc/pdf/defi10-07.pdf
Abstract
International trade can foster economic development. This paper examines the link between immigration from developing countries to OECD countries and their bilateral trade; it also explores some possible mechanism behind this link. It uses a gravity equation for trade augmented by an immigrant stock variable and a set of control variables. The immigrants’ variable enters the estimated equation in different ways depending on immigrants’ relevant characteristics both individual and non individual-specific. Results show that in developing countries there is a positive link between immigration and both exports and imports. We find evidence for the trade transaction cost channel but not for the preference one. We identify the social or ethnic network effect as the mechanism behind this link since immigrants related to business activities are the ones who have a positive effect on bilateral trade.
International Trade, Migration, Economic Development.
Type
preprint
Identifier
oai:RePEc:aee:wpaper:1007
RePEc:aee:wpaper:1007
http://www.aeefi.com/RePEc/pdf/defi10-07.pdf
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