Outward Migration and Inward FDI: Factor Mobility between Eastern and Western Europe

16 Pages Posted: 18 Jul 2012

See all articles by Gianfranco De Simone

Gianfranco De Simone

Dipartimento di Scienze Economiche, Aziendali e Statistiche

Miriam Manchin

University College London; Centro Studi Luca d'Agliano

Date Written: August 2012

Abstract

A growing strand of literature highlights that migration may favor growth‐enhancing technology transfer, trade, and foreign direct investments between the source and the host economies of migrants (network effects). A specific channel is explored through which the possible “diaspora externality” associated with the emigration of workers may occur: the removal of informational, cultural, and reputational barriers that could prevent firms of high‐income countries from investing in the low‐income immigrants' economies of origin. By means of a straightforward gravity specification, a fragmentation and multinational production model is taken to the data. The focus is on the mobility of capital and workers between the advanced European Union countries (EU15) and New Member States (NMS) in the 1995–2007 period. The evidence points to a significant correlation between the volume of EU15's activities in NMS and the total stock of NMS's own‐migrants in the EU15 economies.

Suggested Citation

De Simone, Gianfranco and Manchin, Miriam, Outward Migration and Inward FDI: Factor Mobility between Eastern and Western Europe (August 2012). Review of International Economics, Vol. 20, Issue 3, pp. 600-615, 2012. Available at SSRN: https://ssrn.com/abstract=2111856 or http://dx.doi.org/10.1111/j.1467-9396.2012.01041.x

Gianfranco De Simone (Contact Author)

Dipartimento di Scienze Economiche, Aziendali e Statistiche ( email )

Università degli Studi di Milano
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Italy
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HOME PAGE: http://www.economia.unimi.it/hp/see_hp.php?login=desimone

Miriam Manchin

University College London ( email )

Gower Street
London, WC1E 6BT
United Kingdom

Centro Studi Luca d'Agliano ( email )

Via Conservatorio 7
Milan, 20122
Italy

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