Does Birthplace Diversity Affect Economic Complexity? Cross-Country Evidence

46 Pages Posted: 27 Nov 2019

See all articles by Dany Bahar

Dany Bahar

Brookings Institution; Harvard University - Center for International Development (CID)

Hillel Rapoport

Paris School of Economics (PSE)

Riccardo Turati

Catholic University of Louvain (UCL) - School of Economic and Social Research (IRES)

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Date Written: 2019

Abstract

We empirically investigate the relationship between a country's economic complexity and the diversity in the birthplaces of its immigrants. Our cross-country analysis suggests that birthplace diversity is strongly and positively associated with economic complexity. This holds particularly for diversity among highly educated migrants and for countries at intermediate levels of economic complexity. The results are robust to accounting for previous trends in birthplace diversity as well as to using alternatives diversity measures. We address endogeneity concerns by instrumenting diversity through predicted stocks from a pseudo-gravity model as well as from a standard shift-share approach. Finally, we provide evidence suggesting that birthplace diversity boosts economic complexity by increasing the diversification of the host country's export basket.

Keywords: economic complexity, birthplace diversity, immigration, growth

JEL Classification: F220, O310, O330

Suggested Citation

Bahar, Dany and Rapoport, Hillel and Turati, Riccardo, Does Birthplace Diversity Affect Economic Complexity? Cross-Country Evidence (2019). CESifo Working Paper No. 7950. Available at SSRN: https://ssrn.com/abstract=3493662

Dany Bahar (Contact Author)

Brookings Institution ( email )

1775 Massachusetts Ave, NW
Washington, DC 20036
United States

Harvard University - Center for International Development (CID)

One Eliot Street Building
79 JFK Street
Cambridge, MA 02138
United States

Hillel Rapoport

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Riccardo Turati

Catholic University of Louvain (UCL) - School of Economic and Social Research (IRES) ( email )

3, Place Montesquieu
1348 Louvain-la-Neuve
Belgium

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