شبکه های مهاجر و سرمایه گذاری مستقیم خارجی
|کد مقاله||سال انتشار||تعداد صفحات مقاله انگلیسی||ترجمه فارسی|
|9574||2011||11 صفحه PDF||سفارش دهید|
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Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Journal of Development Economics, Volume 94, Issue 2, March 2011, Pages 231-241
Although there exists a sizeable literature documenting the importance of ethnic networks for international trade, little attention has been devoted to studying the effects of migrants on foreign direct investment (FDI). The presence of migrants can stimulate FDI by promoting information flows across international borders and by serving as a contract enforcement mechanism. This paper investigates the link between the presence of migrants in the US and US FDI in the migrants' countries of origin, taking into account the potential endogeneity concerns. The results suggest that US FDI abroad is positively correlated with the presence of migrants from the host country. The data further indicate that the relationship between FDI and migration is stronger for migrants with tertiary education.
The decline in transportation and communications costs and the reduction in policy induced barriers have led to a rapid increase in the flow of goods, capital, people and knowledge across international boundaries. Although an extensive literature has explored the effects of these forces, little attention has been paid to the more subtle linkages and feedback mechanisms that have been shaping the global economy. One of such linkages is the influence of migration on foreign direct investment (FDI), which is the focus of this paper. A growing body of research has documented a positive association between the presence of ethnic networks and international trade. In contrast, the link between migration and FDI remains relatively unexplored. The main premise of the literature is that international transactions are plagued with informal trade barriers, in addition to formal trade barriers such as transportation costs and tariffs. Among these barriers are the difficulties associated with provision of information on many issues, including potential market opportunities, and with enforcing contracts across national boundaries. As argued by Gould, 1994, Head and Ries, 1998, Rauch and Trindade, 2002 and Combes et al., 2005, the presence of people with the same ethnic or national background on both sides of a border may alleviate these problems. Their language skills and familiarity with a foreign country can significantly lower communication costs. The information they possess about the market structure, consumer preferences, business ethics and commercial codes in both economies can be invaluable in identifying new business opportunities. Their social links, networking skills and knowledge of the local legal regime decrease the costs of negotiating and enforcing contracts. In short, business and social networks that span national borders can help overcome many contractual and informational barriers and stimulate mutually beneficial international transactions. Foreign direct investment activities face even larger information asymmetries than international trade transactions. Direct investment generally requires a long-term focus and interactions with diverse group of economic agents from suppliers, workers and consumers to government officials. The investor needs to have detailed knowledge of retail, labor and input markets as well as the legal and regulatory regimes in the host country.1 Contractual and informational problems can be quite severe and that is why variables related to governance and legal regimes are found to be among the most important determinants of FDI flows into a country.2 For all these reasons, it is natural to expect a positive relationship between migration and FDI, yet surprisingly the link between the two is a relatively unexplored area.3 The handful of studies that examine the link between migration and FDI, discussed in detail in the next section, usually find a positive relationship between the two variables. This paper contributes to the existing literature by explicitly taking into account the endogeneity problem that has been ignored in the previous studies. Endogeneity arises since migration and FDI flows can influence each other. On the one hand, FDI inflows bring capital, new technology and know-how and in this way stimulate economic growth in host countries (provided some conditions are fulfilled, as pointed out by Alfaro et al., 2004). Entry of multinationals can also produce better employment opportunities and higher paying jobs. Therefore, FDI inflows can lower the incentives to migrate. On the other hand, the presence of FDI can have a positive effect on migration as local employees can be transferred by their foreign employer to the company headquarters or its other subsidiaries abroad. Their experience of working for a multinational can also ease the employees' move to other countries. The presence of multinational firms in a country can encourage workers to acquire skills appropriate for the global economy — such as learning foreign languages — which would facilitate their migration. These effects are likely to be stronger for highly educated workers who possess the skills required by foreign multinationals. Yet none of the existing studies (reviewed in the next section) have addressed the potentially critical issue of endogeneity. In this paper, we examine the relationship between the presence of migrants in the US and the US foreign direct investment in 56 countries around the world. To address the potential endogeneity of migration with respect to FDI, we employ the instrumental variable approach. Our instruments include: the costs of acquiring a national passport in the migrants' country of origin, the total migrant stock from each source country present in the US 30 years earlier normalized by the total population size of the source country, distance to the European Union (EU), presence of a US military base in the migrant country of origin 20 years earlier, a dummy indicating whether the migrant's country of origin allows its citizens to hold dual citizenship. Our results suggest that the presence of migrants in the US increases the volume of US FDI in their country of origin. The magnitude of the effect is economically meaningful, as a 1-percent increase in the migrant stock is associated with a 0.35–0.42% increase in the FDI stock. The effect appears to be stronger for skilled migrants, that is, those with at least a college education. A 1-percent increase in the number of migrants with tertiary education increases FDI by 0.41–0.52%. Furthermore, a 10-percent rise in the share of tertiary educated migrants (keeping total number of migrants constant) increases the FDI stock in their country of origin by an additional 0.3%. Migration of educated people (the so-called brain drain), particularly from developing countries to developed ones, is generally perceived as having a negative effect on the home country. This effect may be somewhat mitigated by flows of remittances from migrants, which generate significant income for many developing countries. Our results suggest that there exists another positive effect of migration. The presence of a diaspora can serve as a channel of information transfer across international borders and thus contribute to greater integration of their home country with the global economy through larger presence of FDI.4 In addition to extending the literature on ethnic networks and FDI, our study contributes to the literature on the linkages between factor mobility and international trade. Factor mobility and trade emerge as substitutes or complements in various models, depending on the underlying assumptions on technology, factor endowments and mobility.5 Our results suggest that interactions between the movements of the underlying factors of production — labor and capital in this case — also need to be taken into account. This study is structured as follows. The next section briefly reviews the related literature. Section 3 describes the empirical strategy, while Section 4 presents the data used. The empirical results are discussed in Section 5. The final section presents the conclusions.
نتیجه گیری انگلیسی
The purpose of this paper is to examine whether migrant networks have a positive effect on foreign direct investment destined for the migrants' country of origin. To study this question, we use data on the US FDI abroad and the presence of migrants in the US. We take into account the potential simultaneity between FDI and migration. We instrument for the migrant presence in the US using information on passport costs, dual citizenship rules, military presence, lagged migrant presence in the US, and the distance to the EU, an alternative migration destination. Our results suggest that the US FDI abroad is positively correlated with the presence of migrants from the host country. This finding is consistent with the hypothesis that ethnic networks serve as an important channel of information about business conditions and opportunities abroad. Our findings further indicate that the relationship between FDI and migration is stronger in the case of migrants with tertiary education, thus suggesting that the presence of an educated diaspora may have a positive effect on the integration its country of origin with the global economy.