Migration and trade

Last updated on 6 April 2021

Most econometric studies on the relationship between migration and trade analyze the impact of immigration on trade of goods and services. The presence of large diasporas in a country is often correlated with an increase in bilateral trade between the migrants’ host countries and their countries of origin. This phenomenon, referred to as “nostalgia trade”, focuses on trade in goods distinctive to the migrants’ home country and trade in tourism services. Trade agreements, such as Mode 4 of the General Agreement on Trade in Services (GATS), classify the temporary movement of persons in order to provide services as a means by which international trade in services is conducted. GATS and GATS-like agreements, in turn, facilitate mobility as it relates to trade in services. 

The bilateral impact of immigration on merchandise trade tends to slightly favor the host country, but such a negative impact on the trade balance of the origin country could be offset by remittances, services trade and foreign direct investment (Genç, Gheasi, Nijkamp, and Poot, 2012). Unlike migrant remittances, the most direct and established enabler of development, the developmental effects of trade promoted by migration are not yet well understood.