Immigrants’ pro-trade effects: Evidence from Brazil
October 8, 2020
This paper investigates the impact of immigrants’ (foreigners) links with their home-country on Brazilian imports and exports of goods. According to the literature, immigrants affect positively both imports and exports because they possess superior knowledge of home country markets aspects, language skills and business contacts that mitigate informal barriers to trade. However, most of the published studies focused on evaluating these matters in developed economies contexts. Differently, to test the empirical significance and magnitude of these effects we use Brazilian detailed data (unexplored by literature) from 2002 to 2016 at the municipality and worker level to estimate augmented gravity equations. According to the results, municipalities with relatively more immigrants from a particular country (especially the ones holding management positions in international trading firms) trade more with this country. However, we find evidence in favor of exports diverting effect. The results also indicate larger effects for differentiated (more complex) products and for countries with different religious beliefs and institutions from Brazil.
Ippedico's Comments (Summary)
- Clear conceptual framework (not very common in economics papers!)
- Fantastic data: detailed import-export info at the very local level, and observe nationality in labor contracts
- Convincing empirical evidence: immigrant managers promote trade, unlike non-directors