Expatriates and Trade

CERGE-EI Working Paper No. 387

34 Pages Posted: 1 Oct 2009

See all articles by Tomas Konecny

Tomas Konecny

Czech National Bank (CNB); CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute)

Date Written: August 1, 2009

Abstract

The study quantifies the contribution to bilateral trade flows of expatriates from the OECD economies living in less developed countries. Similarly to the results of the existing research that focused on immigrants moving in the opposite direction, the expatriates promote trade between the country of origin and country of residence. The expatriates’ facilitation of trade is nonetheless relatively weaker and works likely through different channels. Using a unique dataset on bilateral migration stocks, a 10 percent increase in the size of an expatriate community leads to a 0.6 percent average increase in its OECD trade partner’s imports against a 2.5 percent impact of immigrants in OECD countries. The import facilitating role of expatriate networks is centered in host countries with low institutional quality. In economies lying within the lowest third of the institutional quality distribution, a 10 percent increase in expatriate stock would lead to a 1.7 percent increase in imports into their country of origin. The figures on expatriates’ role in exports are not statistically different from zero.

Keywords: international trade, migration, informal trade barriers

JEL Classification: F22, O24

Suggested Citation

Konecny, Tomas, Expatriates and Trade (August 1, 2009). CERGE-EI Working Paper No. 387. Available at SSRN: https://ssrn.com/abstract=1478416 or http://dx.doi.org/10.2139/ssrn.1478416

Tomas Konecny (Contact Author)

Czech National Bank (CNB) ( email )

Na Prikope 28
CZ-11503 Praha 1
Czech Republic

CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute) ( email )

Politickych veznu 7
Prague 1, 111 21
Czech Republic

HOME PAGE: http://www.cerge-ei.cz

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