Discussion Paper

No. 2019-63 | November 14, 2019
Interaction of emigration and immigration with foreign direct investment, international trade and remittances

Abstract

This paper studies the international mobility of capital and labour. Using a Mixed Linear Model (MMA) the authors analyse the interaction of emigration and immigration with foreign direct investment, exports and imports, and international remittances. The sample comprises 112 countries with which Spain has closely interconnected migratory, commercial and investment exchanges, and they focus both on the period prior to the great recession, 1998–2007, and on the subsequent period, 2008–2016. The results show that a greater number of immigrants in Spain boost foreign direct investment (FDI), remittances sent and received and Spanish imports and exports to the immigrants' countries of origin. In contrast to what was often stated in the classical approaches, this relationship is maintained in the long term and also has effects on emigration. Thus, an inverse relationship of emigration from Spain with the FDI and remittances sent is confirmed. With the economic downturn, the FDI declines and the number of migrants from Spain and remittances received began to increase. In a sense, FDI and migration could also be seen as a kind of risk aversion strategy. In fact, when looking at the behaviour of these variables together across a wide sample of countries and years, it is observed that immigration and emigration act as two sides of the same coin. The results lead the authors to recommend those strategies and policies that serve to take advantage of and promote the interaction of mobility factors, since it allows diversifying risks of companies and workers and finding new commercial and investment opportunities.

Data Set

JEL Classification:

F10, F21, F22, F24

Assessment

  • Downloads: 151

Links

Cite As

Antonio Mihi-Ramirez, Janusz Sobierajc, and Yolanda Garcia-Rodriguez (2019). Interaction of emigration and immigration with foreign direct investment, international trade and remittances. Economics Discussion Papers, No 2019-63, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2019-63


Comments and Questions


Anonymous - Better research
November 14, 2019 - 13:35

This is a relevant issue about how mobility factors are connected. Migratory flows, capital flows and trade are constantly evolving and are key elements for any country, so they should be tracked over time.
At the empirical level, many connections between factors are analyzed, which allow us to get an ...[more]

... idea of the interplay of variables that are usually studied separately.
Including the long term makes it possible to clarify several aspects of the previous literature. Thus, it is very interesting to read about how migration and fdi evolve over time, so that they do not end, but are relationships that adapt over time.


Antonio Mihi-Ramirez - reply
November 18, 2019 - 16:34

thank you very much to remakr the main aspects of the paper. it is a very precise observation and helpfull.


Anonymous - Pertinence
November 15, 2019 - 15:38

It is a stong document, with solid metodology and accurate analysis.
I am in Colombia, and this kind of researh are so usefull for our region.


Antonio Mihi-Ramirez - answer
November 18, 2019 - 16:36

Thank you for your comment. It is positive that our paper is useful for researchers of any country


Anonymous - Remarkable topic.
December 07, 2019 - 01:33

The topic of this article is remarkable, since it contains a longitudinal study about migration from Spain to another country and viceversa due to the Economic crisis in Spain and its later period of recovery. Furthermore, it shows an excellent example of the long term migration effects.


antonio mihi-ramirez - answer
December 07, 2019 - 09:35

thank you for the feedback. We appreciate your analysis about the empirical section and the topic. We also believe a long term perspective is relevant in the case of migration flows.


Anonymous - Referee Report 1
December 12, 2019 - 11:29

This paper tries to investigate the interaction of emigration and immigration on foreign direct investment, international trade and remittances. The author considers Spain with 112 countries. The author(s) try to answer the following research questions:

1. Does the increase in the number of migrants in the destination country mean ...[more]

... an increase in the FDI flow ot the migrants’ countries of origin?
2. What is more relevant for emigration and greater immigration, FDI or remittances?
3. What is the relationship between immigration, FDI and international trade?
a. Does the trade of the destination country increase towards the countries of the immigrants?
b. Do the emigrants of the host country choose as destinations those countries where the international trade of their country is greater?

The authors employ linear mixed models (LMM) with the help of R and presents their results. There are a couple of issues that I would like to share with the authors:

1. First of all, by looking at the number of hypothesis and research questions, I got an impression that I am about to read a thesis than a paper. I strongly suggest the author(s) to focus on one topic and bring a convincing story. The current paper includes a large number of hypothesis and research questions that the author(s) could not answer to them properly.
2. I find it very weird that the author(s) did not presented their empirical results in a form of Table. As a reader I cannot believe the results without reporting the coefficients and standard errors. The paper includes two tables of descriptive statistics.
3. Trade, remittance and FDI also include zero flows. How do the author(s) addressed this issue? also the endogeneity issue has not been addressed. Therefore, the presented results are biased.
4. For such a large number of research questions the conclusion and interpretation of results is very short and lacks convincing interpretation.