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Migration and Cross-Border Financial Flows

Author

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  • Maurice Kugler
  • Oren Levintal
  • Hillel Rapoport

Abstract

Migration facilitates the flow of information between countries, thereby reducing informational frictions that potentially hamper cross-country financial flows. Using a gravity model, migration is found to be highly correlated with financial flows from the migrant’s host country to her home country. The correlation is strongest where information problems are more acute (e.g., between culturally more distant countries), for asset types that are more informational sensitive, and for the type of migrants that are most able to enhance the flow of information on their home countries, namely, skilled migrants. These differential effects are interpreted as evidence for the role of migration in reducing information frictions between countries.

Suggested Citation

  • Maurice Kugler & Oren Levintal & Hillel Rapoport, 2018. "Migration and Cross-Border Financial Flows," The World Bank Economic Review, World Bank, vol. 32(1), pages 148-162.
    • Handle: RePEc:oup:wbecrv:v:32:y:2018:i:1:p:148-162.
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    File URL: http://hdl.handle.net/10.1093/wber/lhx007
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    Cited by:

    1. Volker Grossmann, 2021. "How immigration affects investment and productivity in host and home countries," IZA World of Labor, Institute of Labor Economics (IZA), pages 292-292, October.
    2. Matthias Lücke & Tobias Stöhr, 2018. "Heterogeneous immigrants, exports and foreign direct investment: The role of language skills," The World Economy, Wiley Blackwell, vol. 41(6), pages 1529-1548, June.
    3. Hillel Rapoport, 2016. "Migration and globalization: what’s in it for developing countries?," International Journal of Manpower, Emerald Group Publishing Limited, vol. 37(7), pages 1209-1226, October.
    4. Dany Bahar, 2020. "Diasporas and Economic Development: A Review of the Evidence and Policy," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 62(2), pages 200-214, June.
    5. Ernest Miguélez, 2018. "Inventor Diasporas and the Internationalization of Technology," The World Bank Economic Review, World Bank, vol. 32(1), pages 41-63.
    6. Etzo, Ivan & Takaoka, Sumiko, 2016. "The impact of migrants on the cross-border M&A: Some evidence for Japan," MPRA Paper 71558, University Library of Munich, Germany.
    7. Dany Bahar, 0. "Diasporas and Economic Development: A Review of the Evidence and Policy," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 0, pages 1-15.
    8. Diego Useche & Ernest Miguelez & Francesco Lissoni, 2020. "Highly skilled and well connected: Migrant inventors in cross-border M&As," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(5), pages 737-763, July.
    9. Hillel Rapoport, 2018. "Diaspora externalities: A view from the South," WIDER Working Paper Series 025, World Institute for Development Economic Research (UNU-WIDER).
    10. Gianluca Orefice & Hillel Rapoport & Gianluca Santoni, 2021. "How Do Immigrants Promote Exports?," Working Papers DT/2021/04, DIAL (Développement, Institutions et Mondialisation).
    11. Eric Rougier & Nicolas Yol, 2018. "The volatility effect of diaspora’s location: A migration portfolio approach," Cahiers du GREThA (2007-2019) 2018-09, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    12. Lücke, Matthias & Stöhr, Tobias, 2015. "Heterogeneous Immigrants and Foreign Direct Investment: The Role of Language Skills," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113191, Verein für Socialpolitik / German Economic Association.
    13. Anthony Edo & Lionel Ragot & Hillel Rapoport & Sulin Sardoschau & Andreas Steinmayr & Arthur Sweetman, 2020. "An introduction to the economics of immigration in OECD countries," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(4), pages 1365-1403, November.
    14. Donaubauer, Julian & Glas, Alexander & Nunnenkamp, Peter, 2015. "Infrastructure and trade: A gravity analysis for major trade categories using a new index of infrastructure," Kiel Working Papers 2016, Kiel Institute for the World Economy (IfW Kiel).
    15. Ding, Haoyuan & Fan, Haichao & Jin, Yuying & Qi, Tong, 2022. "Talented overseas returnees and outward foreign direct investment," European Economic Review, Elsevier, vol. 148(C).
    16. Masood Gheasi & Peter Nijkamp, 2017. "A Brief Overview of International Migration Motives and Impacts, with Specific Reference to FDI," Economies, MDPI, vol. 5(3), pages 1-11, August.
    17. Miguelez, Ernest & Noumedem Temgoua, Claudia, 2020. "Inventor migration and knowledge flows: A two-way communication channel?," Research Policy, Elsevier, vol. 49(9).
    18. Anna Minasyan & Peter Nunnenkamp, 2016. "Remittances and the Effectiveness of Foreign Aid," Review of Development Economics, Wiley Blackwell, vol. 20(3), pages 681-701, August.
    19. Ademmer, Esther & Barsbai, Toman & Lücke, Matthias & Stöhr, Tobias, 2015. "30 Years of Schengen: Internal blessing, external curse?," Kiel Policy Brief 88, Kiel Institute for the World Economy (IfW Kiel).
    20. Hillel Rapoport, 2018. "Diaspora externalities: A view from the South," WIDER Working Paper Series wp-2018-25, World Institute for Development Economic Research (UNU-WIDER).
    21. Diego Useche & Ernest Miguelez & Francesco Lissoni, 2019. "Highly skilled and well connected: Migrant inventors in cross-border M&As," Post-Print halshs-02024499, HAL.

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    More about this item

    Keywords

    Migration; international financial flows; international loans; gravity models; information asymmetries;
    All these keywords.

    JEL classification:

    • 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
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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