Academic journal article The Journal of Developing Areas

Do African Immigrants Enhance Their Home Nations' Trade with Their Hosts?

Academic journal article The Journal of Developing Areas

Do African Immigrants Enhance Their Home Nations' Trade with Their Hosts?

Article excerpt

ABSTRACT

Employing data on the immigrant stocks of 43 African home countries who reside in 110 host countries and on trade flows between these countries during the year 2005, we examine whether African immigrants exert positive effects on their home countries' trade with the typical host country. Estimates from Tobit regression models indicate a one percent increase in the number of African immigrants in a given host country increases that country's exports to and imports from the typical home country by 0.132 percent and 0.259 percent, respectively. Further evaluation of these effects from the perspective of each African home country reveals that, in several instances, immigrants do not exert positive and significant influences on trade flows. The considerable variation in the presence of pro-trade influences and the dissimilarity of estimated significant effects suggests that highly divergent immigration and trade structures among African countries may affect whether African immigrants exert pro-trade influences.

JEL Classifications: F14 F15 F22 O11

Keywords: Africa, Economic Development, Immigrants, Trade

(ProQuest: ... denotes formulae omitted.)

INTRODUCTION

International migration has resulted in a considerable loss of human capital for many African nations. Marfouk (2006) estimates that, due to migration, 10 of the 53 African nations have lost at least 35 percent of their tertiary level-educated labor force. In many countries - specifically, Cape Verde (68%), Gambia (63%), Seychelles (56%), Mauritius (56%) and Sierra Leone (53%) - the loss has been quite severe. Based on this and other information, Akokpari (2006) argues that international migration generally has had adverse effects for African nations. Consequently, it is unsurprising that policymakers in many African countries are concerned with what are often described as potentially catastrophic consequences of increased emigration. Even so, emigration may have positive effects on both aggregate income levels and the growth rates of income for many emigrant source countries. For example, a recent cross-country analysis of the effect of emigration on poverty by Cattaneo (2009) concludes that, ceteris paribus, a 10 percent increase in the per capita stock of migrants in OECD nations augments the incomes of the poor in their source countries by an average of one percent. Given that international migrants have also been found to increase the trade and/or foreign direct investment flows between their host and home countries, migrants may confer positive effects on economic growth and, hence, the economic development of both their host and home nations (Murat and Pistoresi, 2009).

While numerous studies have examined the effects of immigrants on trade, owing to the extensive availability of immigrant stock data for relatively more developed host countries and the intense public interest in the immigration policies of these countries, prior studies have largely focused on the potential effects of immigrants on trade between developed host countries and their immigrants' home countries. Although this emphasis on developed host countries has produced a deeper understanding of the immigrant-trade relationship, the lack of home country-specific data on emigrant stocks has resulted in little attention being given to the implications of the relationship for developing home countries. As Docquier (2007) notes, while the flow of immigrants, particularly those that are highly skilled, from developing home countries to developed host countries is quite large, considerable numbers of people also migrate from one developing country to another. Parsons et al., (2007), for example, reports that as much as one quarter of the world's international migration flow occurs between developing countries. According to Parsons et al., (2007), African countries supply as much as eight percent of the stock of immigrants in Western Europe, and several African countries serve as hosts to millions of immigrants from within the region. …

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