Product Complexity, Quality of Institutions and the Protrade Effect of Immigrants

Authors


  • This paper has been prepared as part of the PREDIT research contract 04-mt-5036. Financial supports from PREDIT and from CNRS (Combes) are gratefully acknowledged. The authors are also involved in the Marie Curie Research Training Network ‘TOM – transnationality of migrants’ funded by the European Commission (contract: mrtn-ct-2006-035873). We are grateful to David Greenaway and an anonymous referee for constructive suggestions. We are especially indebted to Alain Sauvant and Micheline Travet for providing us with trade data, as well as to Alexandre Kych and Thierry Mayer for precious help in gathering immigration and institution data. We also thank Laurent Gobillon, Farid Toubal, Muriel Barlet and Rodrigo Paillacar for insightful comments and the participants to the CEPR Conference on ‘Trade, Industrialisation and Development’ (Paris, October 2006) and to the RIEF doctorial meeting (Rennes, February 2007), for useful feedback.

Abstract

The paper assesses the trade-creating impact of foreign-born residents on the international imports and exports of the French regions where they are settled. The protrade effect of immigrants is investigated along two intertwined dimensions: the complexity of traded goods and the quality of institutions in partner countries. The trade-enhancing impact of immigrants is, on average, more salient when they come from a country with weak institutions. However, this positive impact is especially large on the imports of simple products. When we turn to complex goods, for which the information channel conveyed by immigrants is the most valuable, immigration enhances imports regardless of the quality of institutions in the partner country. Regarding exports, immigrants substitute for weak institutions on both simple and complex goods.

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