Immigrants’ Networks, Distance, and Trade Creation Effects: An Study Employing Province-Level Data for Italy, Spain and Portugal

Andrés Artal-Tur (), Vicente Pallardó-López () and Francisco Requena-Silvente ()
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Andrés Artal-Tur: Technical University of Cartagena
Vicente Pallardó-López: University of Valencia
Francisco Requena-Silvente: University of Sheffield
Authors registered in the RePEc Author Service: Francisco Requena Silvente

A chapter in The Socio-Economic Impact of Migration Flows, 2014, pp 3-18 from Springer

Abstract: Abstract Neoclassical trade theory assumed international flows of goods (commodities) to be substituting for people (factor) flows under certain circumstances. However, recent empirical evidence shows a complementary relationship between these two types of flows, with migration creating new trade exchanges. Immigrants tend to form networks across borders, reducing fixed trade costs. They also retain some preference for their home-produced goods. These two channels provide the rationale of the immigration trade-enhancing linkage. In this study we investigate that issue for the cases of Italy, Spain and Portugal, employing province-level data for the period 2002–2010. Results show that the first channel (network channel) is the most important in this case. In addition, we observe that the larger the distance between trade partners (in terms of geography, culture, income per capita, or institutions), the bigger the trade creation effect found. All these findings are relevant for prescriptions in terms of EU Common Policies of Migration and Trade.

Keywords: European Union; Trade Flow; Bilateral Trade; Preference Effect; European Union Country (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:spr:popchp:978-3-319-04078-3_1

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DOI: 10.1007/978-3-319-04078-3_1

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