Skilled Migration and Business Networks
Centro Studi Luca d'Agliano Development Studies Working Paper No. 234
39 Pages Posted: 25 Jul 2007
Date Written: May 2007
The role of migrants' networks in promoting cross border investments has been stressed in the literature, possibly making migration and FDI complements rather than substitutes in the long run. In this paper, we estimate the magnitude of such business network externalities in dynamic empirical models of FDI-funded capital accumulation. We use original data on capital and migration stocks rather than flows. Regarding migrants, we distinguish the total and the skilled diasporas abroad. In both cross-sectional and panel frameworks, we find evidence of strong network externalities, mainly associated to the skilled diaspora. These network externalities are stronger for countries exhibiting intermediate corruption index.
Keywords: FDI, Migration, Brain drain, Network, Diaspora
JEL Classification: F2, O15, Z13
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