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Can Immigrants Hurt Trade?

Author

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  • Tomas Konecny

Abstract

This paper estimates the impact of immigrant network spillovers on international trade. Contrary to previous studies focusing mostly on the trade enhancing role of immigrant networks, the present framework allows for potential trade diverting effects. A simple matching model that incorporates both trade creation and diversion channels furthermore points at the importance of relative as opposed to absolute measures of immigrant networks. Using a new dataset of 19 OECD countries, I find that while immigrant networks indeed facilitate exports from host to source country, they simultaneously hurt trade with the host country’s other trading partners. In addition, I find that the impact of information-related trade barriers might be negatively related to the economic size of the trading partner. In particular, the larger the trading partner, the smaller the trade benefits of lower information costs due to a shared common language.

Suggested Citation

  • Tomas Konecny, 2007. "Can Immigrants Hurt Trade?," CERGE-EI Working Papers wp329, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    • Handle: RePEc:cer:papers:wp329
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    File URL: http://www.cerge-ei.cz/pdf/wp/Wp329.pdf
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    Cited by:

    1. Marcus H. Böhme & Sarah Kups, 2017. "The economic effects of labour immigration in developing countries: A literature review," OECD Development Centre Working Papers 335, OECD Publishing.

    More about this item

    Keywords

    International trade; immigration; informal trade barriers.;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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