Do Migrants Really Foster Trade? The Trade-Migration Nexus, a Panel Approach 1960-2000
Despite the burgeoning empirical literature providing evidence of a strong and robust positive correlation between trade and migration, doubts persist as to unobserved factors which may be driving this relationship. This paper re-examines the trade...
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2012/04/16219447/migrants-really-foster-trade-trade-migration-nexus-panel-approach-1960-2000 http://hdl.handle.net/10986/6036 |
| Summary: | Despite the burgeoning empirical
literature providing evidence of a strong and robust
positive correlation between trade and migration, doubts
persist as to unobserved factors which may be driving this
relationship. This paper re-examines the trade-migration
nexus using a panel spanning several decades, which
comprises the majority of world trade and migration in every
decade. First the findings common to the literature are
reproduced. Country-pair fixed effects are then used to
account for unobserved bilateral factors, the implementation
of which removes all of the positive impact of migration on
trade. In other words the unobserved factors, a leading
candidate for which it is argued is international bilateral
ties, are on average strongly and positively correlated with
migrant networks. Dividing the world into the relatively
affluent North and poorer South, the results show that
migrants from either region only affect Northern exports to
the South. This is intuitive since in general countries of
the North export more differentiated products and
information barriers between these regions are greatest. A
country-level analysis further shows that migrants may both
create and divert trade. Taken as a whole, the results
demonstrate the large biases inherent in cross-sectional
studies investigating the trade-migration nexus and
highlight the extent to which previous results have been overstated. |
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