Understanding the Immigrant–Trade Link
Chapter 10: Asymmetric Information and Trade-Facilitating Infrastructure: Variation in the Immigrant–Trade Link Across Migration Corridors
10 Asymmetric information and tradefacilitating infrastructure: Variation in the immigrant–trade link across migration corridors While immigrants are found to generally exert strong pro-trade effects, the magnitudes of these effects vary across product characteristics, by home country attributes and across host–home country cultural and institutional dissimilarities. Differences also exist in terms of the channels through which immigrants from different home countries affect trade between their home and host countries. The variation in these channels and in the magnitudes of the observed effects indicates a strong possibility that the ability of immigrants to influence trade corresponds with trade-related transaction costs and product- and/or market-related information asymmetries, both of which would be affected by the existence and quality of available trade-facilitating infrastructure in both the home countries and the host countries. Evaluation of this potential relationship requires data for a number of host and home countries. To this end, we use data representing 110 host and 131 home countries during the year 2005. More specifically, we employ the United Nations Human Development Index (HDI) to categorize countries with relatively high human development (that is, HDI values > 0.8) as ‘North’ countries and those characterized by middle and low human development as ‘South’ countries (UNDP, various years).1 The result is four migration corridors (that is, North–North, North– South, South–North and South–South) that are characterized by stark differences in the existence and quality of trade-facilitating infrastructure. Using these classifications, we examine the relative proportional and absolute influences of immigrants on...
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