Chapter 1: An Overview of the Immigrant–Trade Relationship
The increased pace and scope of economic integration has contributed, particularly within developed nations, to the emergence of immigration and international trade as important domestic policy issues. A large body of literature has emerged in recent years to detail the positive influences of immigrants on trade between their host and home countries. These pro-trade influences are thought to result from immigrants’ knowledge of host and home country customs and business practices, their language abilities and understanding of informal contracting structures, and their connections to business and social networks that act to reduce traderelated transaction costs. Immigrants are also thought to increase their host countries’ imports from their respective home countries if they arrive with preferences for home country goods and find that neither the desired products nor reasonable substitutes are available. Immigrants may also exert indirect influences on their host country’s imports if their consumption exposes native-born residents and immigrants from other countries who reside in the host country to home country products. This may lead to spillover effects as these individuals also begin to consume the home country products. If so, then the host country’s imports from the immigrants’ home countries will increase further. Additionally, immigrants’ remittances may enable individuals in the immigrants’ home countries to consume at higher levels than would otherwise be possible. If so, this potentially increases the host country’s exports to these home countries. Likewise, if immigrants act to increase foreign direct investment (FDI) between their home and host countries, subsequent corresponding increases in host...
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