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Migrant network effect and economic development

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  • Lim, Sokchea
  • Khun, Channary

Abstract

We compare the development effect of information cost reduction with that of migration cost reduction in a two-sector, macro-dynamic framework that incorporates a migrant network effect. Numerical analyses show that although the reduction in information cost can stimulate inflows of FDI that benefit the traded sector, the loss of labor due to migration cost reduction hampers the expansion of the sector, leading to a long-run macroeconomic contraction for the developing country.

Suggested Citation

  • Lim, Sokchea & Khun, Channary, 2023. "Migrant network effect and economic development," Economics Letters, Elsevier, vol. 225(C).
    • Handle: RePEc:eee:ecolet:v:225:y:2023:i:c:s0165176523000617
    DOI: 10.1016/j.econlet.2023.111036
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    References listed on IDEAS

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    1. Atolia, Manoj & Chatterjee, Santanu & Turnovsky, Stephen J., 2010. "How misleading is linearization? Evaluating the dynamics of the neoclassical growth model," Journal of Economic Dynamics and Control, Elsevier, vol. 34(9), pages 1550-1571, September.
    2. Stephen J. Turnovsky, 1997. "International Macroeconomic Dynamics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262201119, April.
    3. Lim, Sokchea & Khun, Channary, 2022. "Macroeconomic impacts of remittances: A two-country, two-sector model," Journal of Macroeconomics, Elsevier, vol. 73(C).
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    More about this item

    Keywords

    Labor migration; Remittances; Migrant network effect; FDI; Development;
    All these keywords.

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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