Migrant Networks and Foreign Direct Investment

By B. Javorcik, Caglar Ozden, Mariana Spatareanu, C. Neagu. 2006

487 citations recorded by the source corpus.

While there exists sizeable literature documenting the importance of ethnic networks for international trade, little attention has been devoted to studying the effects of networks on foreign direct investment (FDI). The existence of ethnic networks may positively affect 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 United States and U.S. FDI in the migrants' countries of origin, taking into account the potential endogeneity concerns. The results suggest that U.S. 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 driven by the presence of migrants with a college education.

Subfields: Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/2352bf8f17ebe57ebdc7cf14ff7ac2a5d3e0d5d0

Citations in the corpus

• The Economic Consequences of 'Brain Drain' of the Best and Brightest: Microeconomic Evidence from Five Countries (2010, unknown): “The experience of Indian, Taiwanese and Chinese information technology firms has been used to suggest that a highly skilled diaspora can use their knowledge of the destination country to lower the costs of transacting across countries (Rauch and Trindade, 2002; Kugler and Rapoport, 2005; Javorcik et”
• Migration, Knowledge Diffusion and the Comparative Advantage of Nations (2018, unknown): “On migration and FDI, see, e.g., Tong, 2005; Kugler and Rapoport, 2007; or Javorcik et al. 2011.”
• A Gendered Assessment of Highly Skilled Emigration (2009, unknown): “3See Docquier et al. (2007), Beine et al. (2008), Cecchi et al. (2007), Krueger and Rapoport (2006), Nimii and Ozden (2006), Javorcik et al. (2006), Grogger and Hanson (2008), Easterly and Nyarko (2005), etc. 4Although the "non-economic" literature on the migration of women (mainly based on case…”
• The wider economic impacts of high-skilled migrants: a survey of the literature for receiving countries (2013, unknown): “Diasporic/co-ethnic networks offer an effective means of contract management and enforcement (Javorcik et al. 2011).”
• The Impact of Immigration on International Trade: A Meta-Analysis (2011, unknown): “Others have looked at the effect of immigration on Foreign Direct Investment (e.g. Kugler and Rapoport 2007, Javorcik et al. 2010, Driessen et al. 2011).”
• Same difference? Minority ethnic inventors, diversity and innovation in the UK (2015, unknown): “…studies identify links between co-ethnic communities and industrial performance in home countries (Kerr, 2008a), trade and FDI flows (Rauch and Trindade, 2002; Rauch and Casella, 2003; Kugler and Rapoport, 2007; Javorcik et al., 2011) and US multinational activity (Foley and Kerr, 2013).”
• Determinants of Horizontal Spillovers from FDI: Evidence from a Large Meta-Analysis (2013, unknown): “Moreover, a common language and historical colonial links are associated with migration patterns, and Javorcik et al. (2011) find that migration networks significantly affect FDI flows.”
• International Migration, Transfers of Norms and Home Country Fertility (2008, unknown): “Fourth, a number of studies have found that migration and migrant networks result in increased trade between host and source countries (Gould 1994, Rauch 2001, Rauch and Trindade 2002) and in increased investment from the former to the latter (Kugler and Rapoport 2006, Javorcik et al., 2006).”
• Skilled Migration and Business Networks (2010, unknown): “Javorcik et al. (2006), also examine the relationship between the presence of migrants in the United States and US FDI in the migrants’ countries of origin, explicitly taking into account the endogeneity problem that has been ignored in the previous study.”
• Transnational diaspora entrepreneurship in emerging markets: Bridging institutional divides (2010, unknown): “…study of US foreign direct investment (FDI) abroad finds empirical evidence to support the proposition that diasporas' ethnic networks affect foreign direct investment by promoting information flows across international borders and serve as contract-enforcement mechanisms (Javorcik et al., 2006).”
• Migrant Networks and Trade: The Vietnamese Boat People as a Natural Experiment (2018, unknown): “…high.13 13Given that the literature has shown that migrant networks influence FDI as well as trade (Kugler and Rapoport, 2007; Aubry et al., 2014; Javorcik et al., 2011), it is worth noting that one channel through which the Vietnamese might promote exports to Vietnam is via complementary FDI…”