Canavire Bacarreza, Gustavo Javier and Ehrlich, Laura (2006): The Impact of Migration on Foreign Trade: A Developing Country Approach. Published in: Latin American Journal of Economic Development No. No. 6 (April 2006): pp. 125-146.
Download (124Kb) | Preview
While the causal relationship between migration and trade has not been studied thoroughly, estimation results of gravity model approach suggest that important aspects determining trade volumes can be missed if additional factors, including migration, are not considered. The current paper aims at testing the impact of migration on foreign trade in a relatively closed small economy. We use the data of Bolivia, for the years 1990–2003. We apply gravity model, adding a migration variable to the explanatory variables. We test the impact of both, immigration and emigration on exports and imports and also on intra-industry trade. We use panel estimation including data of 30 trade partners (selected according to higher trade intensity with Bolivia). We control for the economic size and geographical location of trade partners, and for changes in terms of trade. Previous studies show an increasing effect of immigration on both exports and imports elasticities. Some studies find larger exports elasticity compared to imports elasticity, some vice versa. We could not find any studies on emigration impact on trade. Our results show relatively similar impact of both immigration and emigration on foreign trade. Positive significant effect of immigration on exports and imports is confirmed also in Bolivia, even when the migration flows in Bolivia are not as high as in the case of most countries analyzed previously. We can conclude positive effect of migration flows also on intra-industry trade. In the following analysis, we intend to control for the impact of trade agreements and openness of trade partners. We will also try to broaden the sample of trade partners used in the current estimation and to test the hypotheses on other developing countries.
|Item Type:||MPRA Paper|
|Institution:||Instituto de investigaciones socioeconomicas|
|Original Title:||The Impact of Migration on Foreign Trade: A Developing Country Approach|
|Keywords:||migration; trade; gravity model; Bolivia|
|Subjects:||C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models; Multiple Variables > C33 - Models with Panel Data; Longitudinal Data; Spatial Time Series
F - International Economics > F2 - International Factor Movements and International Business > F22 - International Migration
F - International Economics > F1 - Trade > F10 - General
|Depositing User:||Gustavo Javier Canavire Bacarreza|
|Date Deposited:||09. Dec 2006|
|Last Modified:||14. Feb 2013 12:31|
Antelo, E. (2000): Políticas de Estabilización y de Reformas Estructurales en Bolivia a partir de 1985. La Comisión Económica para América Latina (CEPAL) Serie Reformas Económicas 62, Mayo. Bergstrand, J. H. (1985): The gravity equation in international trade: some microeconomic foundations and empirical evidence. Review of Economics and Statistics, Number 67, pp. 474–481. Borkakoti, J. (1998): International Trade. Causes and Consequences. An Empirical and Theoretical Text. Macmillan Press LTD. Combes, P.-P., Lafourcade, M. and Mayer, T. (2003): Can Business and social networks explain the border effect puzzle, CEPII working paper No. 2. Dunlevy, J. A., Hutchinson, W. K. (1999): The Impact of Immigration on American Import Trade in the Late Nineteenth and Early Twentieth Centuries. The Journal of Economic History, Vol. 59, Number 4, pp. 1043–1062. Dunlevy, J. A., Hutchinson, W. K. (2001): The pro-trade effects of immigration on American exports during the period 1870 to 1910. Vandablit University Working Paper 01-W25. Girma, S., Yu, Z. (2000): The link between immigration and trade: evidence from the UK. Centre for the Research on Globalisation and Labour Markets (GLM), School of Economics, University of Nottingham, Research Paper, No. 23. Globerman, S. (1995): Immigration and Trade, in: D.J. DeVoretz (ed.): Diminishing Returns: Canada’s Recent Immigration Policy, C.D Howe and the Laurier Institution, Montreal. Gould, D. M. (1994): Immigrant Links to the Home Country: Empirical Implications for U.S. Bilateral Trade Flows. The Review of Economics and Statistics, Vol. 76, No. 2 (May), pp. 302–316. Grubel, H. G., Lloyd, P. J. (1975): Intra-Industry Trade: The Theory and Measurement of International Trade in Differentiated Products. New York: Wiley. Head, K., Ries, J. (1998): Immigration and Trade Creation: Econometric Evidence from Canada. The Canadian Journal of Economics, Vol. 31, No 1 (Feb.), pp. 47–62. McCallum, J. (1995): National borders matter: Canada–U.S. regional trade patterns. American Economic Review 85, pp. 615–623. Ministry of Sustainable Development (2004), Aspectos de la poblacion en Bolivia. Population policy Unit. Morrison, T, K. (1982): The Relationship of U.S Aid, Trade and Investment to Migration Pressures in Major Sending Countries. International Migration Review, Vol. 16, No. 1 (Spring), pp. 4–26. National Census of Bolivia (2001). National Census of Bolivia (1992). National Statistics of Bolivia. Instituto Nacional de Estadística de Bolivia. Base de Datos en Exportaciones e Importaciones (2004). Parsons, C. (2005): Quantifying the trade-migration nexus of the enlarged EU. A Comedy of Errors or Much Ado About Nothing? Sussex Centre for Migration Research, Sussex Migration Working Paper No. 27. Rauch, J. E., Trindade, V. (2002): Ethnic Chinese Networks in International Trade. The Review of Economics and Statistics, February, Number 84 (1), pp. 116–130. Wagner, D., Head, K., Ries, J. (2002): Immigration and Trade in the Provinces. Scottish Journal of Political Economy, Vol. 49, No. 5, November. World Bank. World Development Indicators 2004.