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A Literature Review of the Nexus between Migration and Internationalization

PublicationArticle (with peer review)
Foreign Direct Investment, information, Migration, networks, Trade

Abstract

Protectionism and anti-globalization tides have been rising already before the COVID-19 pandemic, with Brexit and the China-U.S. trade war, as two examples. A continued disruption to global trade, investment and value chains could worsen global development. Economic recovery will require restoring firms’ ability to trade, offshore and invest globally. To achieve this, it will be useful to understand the role of migration for foreign trade, investment and other aspects of internationalization. In this paper we review and discuss over 100 papers published about migrants’ roles on international trade, foreign direct investment and offshoring. Although the evidence suggests that migration facilitates trade and internationalization, we also note substantial gaps and inconsistencies in the existing literature. The aim of this paper is to encourage further research and assist policymakers in their efforts to promote economic recovery including internationalization.

Hatzigeorgiou, A. & Lodefalk, M. (2021). A Literature Review of the Nexus between Migration and Internationalization. Journal of International Trade & Economic Development, 30(3), 319-340.

Based on content

Trade, Migration and Integration – Evidence and Policy Implications
Article (with peer review)Publication
Hatzigeorgiou, A. & Lodefalk, M.
Publication year

2015

Published in
Abstract

This paper takes as its point of departure the unique position recently adopted by Swedish policymakers emphasising migration as a tool to increase trade. We attempt to empirically scrutinise this position. Our results demonstrate that migrants stimulate exports, especially along the extensive product margin of trade and for differentiated products, but have no significant impact on imports. This finding suggests that for small open economies where numerous immigrants are refugees, the strategy of using migration to facilitate trade may only be effective with respect to exports. This paper also contributes to the literature on trade and migration by exploiting data on gender and age, which allow us to draw inferences on the underlying impact channels. We adopt an instrumental variable approach to address the endogeneity issue due to potential reverse causality. The pattern of results is consistent with the hypothesis that migration primarily reduces fixed trade costs resulting from information and trust friction across migrant host and source countries. Importantly, the results imply that policymakers may be able to promote trade by improving immigrants’ labour market integration instead of simply being restricted to promoting more liberal immigration policies, which is generally more controversial.

A Literature Review of the Nexus between Migration and Internationalization
Artikel (med peer review)Publication
Hatzigeorgiou, A. & Lodefalk, M.
Publication year

2021

Abstract

Protectionism and anti-globalization tides have been rising already before the COVID-19 pandemic, with Brexit and the China-U.S. trade war, as two examples. A continued disruption to global trade, investment and value chains could worsen global development. Economic recovery will require restoring firms’ ability to trade, offshore and invest globally. To achieve this, it will be useful to understand the role of migration for foreign trade, investment and other aspects of internationalization. In this paper we review and discuss over 100 papers published about migrants’ roles on international trade, foreign direct investment and offshoring. Although the evidence suggests that migration facilitates trade and internationalization, we also note substantial gaps and inconsistencies in the existing literature. The aim of this paper is to encourage further research and assist policymakers in their efforts to promote economic recovery including internationalization.

Working paper No. 302: Do Migrants Facilitate Internationalization? A Review of the Literature
Working paperPublication
Hatzigeorgiou, A. & Lodefalk, M.
Publication year

2017

Published in

Ratio Working Paper

Abstract

How migration relates to internationalization has been a prominent question in international economics for a long time and its relevance for policy has increased with the amplified political focus on migration. But the role of migration for internationalization is not as obvious as the standard theory suggests, and tightening migration could have unexpected consequences for both developing and developed countries. In this paper we review and discuss over 100 papers published about migrants’ role in international trade and foreign direct investment, from pioneering country-level studies to nascent firm-level studies that utilize employer-employee data. To our knowledge, this is the first paper offering a wide-ranging review of the different strands of theory on the relationship between migration and internationalization, as well as new empirical findings. Although the evidence suggests that migration can facilitate internationalization, we also note substantial gaps and inconsistencies in the extant literature. The aim of this paper is to encourage future research and assist policymakers in their efforts to promote internationalization, and better understand the economic effects of changes in migration policy.

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