Empir Econ (2019) 56:2079–2092

https://doi.org/10.1007/s00181-017-1408-1

A comparative analysis of African and Asian migrants’

effect on trade

Samuel Admassu1

Received: 13 October 2016 / Accepted: 13 December 2017 / Published online: 21 December 2017
© Springer-Verlag GmbH Germany, part of Springer Nature 2017

Abstract The trade creation effect of migrants is among the topics of interest of con-
temporary development economists. Using a 10-year interval comprehensive dataset
of 136 countries for the period 1970–2000, this paper reveals African migrants pro-
mote homogeneous product exports, while Asians promote the export of manufactured
and differentiated products. Unsurprisingly, however, both African and Asian migrants
have a positive and significant impact on imports from the migrants’ destination coun-
tries.

Keywords Migration · Trade · Diaspora externality · Africa · Asia · Gravity equation

JEL Classification F14

1 Introduction

Studies show that business and social networks are important in facilitating inter-
national trade. These networks overcome informal trade barriers such as inadequate
information about trade opportunities or weak international legal institutions. Ethnic
groups living outside their countries of origin create formal or informal associations
to which co-ethnic business people from both the host countries and the home country

I am grateful to Cong Pham, Debdulal Mallick, the editor as well as the anonymous referees for their
valuable comments and suggestions. I would also like to thank seminar participants at the Department of
Economics of Deakin University for their useful comments and insights on the preliminary version of the
paper. The usual disclaimers apply.

B Samuel Admassu
ethsami@yahoo.com

1 Deakin University, Burwood, VIC, Australia

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2080 S. Admassu

have access. In other words, these migrant networks serve as information exchange
nodes (Rauch and Trindade 2002).
Migrants, through their intervention as an information node, can reduce negotiation
costs, contract costs or costs related to information barriers. In other words, studies
show that through their trusted networks migrants can reduce the costs of negotiating
and enforcing contracts and can deter opportunistic behaviour in weak institutional
environments (Anderson and Van Wincoop 2004; Chaney 2011; Allen 2014; Greif
1993; Gould 1994; Rauch 1999, 2001; Rauch and Trindade 2002; Dunlevy 2006).1
This is possible because migrants have sufficient knowledge of their home and host
country languages, regulations, market opportunities and informal institutions.
This paper systematically analyses the impact of migrants on exports and imports
using a gravity model on a 10-year interval panel dataset of 136 countries for the
period 1970–2000. The results reveal that African migrants promote homogeneous
product exports, while Asians promote the export of manufactured and differentiated
products. Unsurprisingly, however, both African and Asian migrants have a positive
and significant impact on imports from the migrants’ destination countries. Given the
differences in the structure of the economy in Asia and Africa, the result implies that
the structure of the export sector in the home country mainly determine migrants’
impact on exports.2
A number of studies have investigated the impact of migrants on trade, and their
findings reveal that migrants increase international trade. However, there is no study
that examines the comparative impact of Asian and African migrants on trade. This
is interesting for two reasons: (1) unlike their Asian counterparts, African migrants
mainly select low income countries;3 (2) although the two regions started from almost
the same level of economic growth in the 1960s, the Asian countries are experiencing
growth while most African countries are not.4

1 If a business owner violates an agreement, he is blacklisted, which is worse than being sued because the
entire community will refrain from doing business with him.
2 Asian countries export more differentiated products, while African countries export homogeneous com-
modities. For example, in 2000, manufacturing exports as a percentage of total merchandise exports was
26.84% for Sub-Saharan Africa and 85.66% for the East Asia and Pacific. Similarly, high technology exports
as a percentage of manufactured exports are 3.76% for Sub-Saharan Africa, while this figure is 33.25% for
the EAP region (World Bank WITS UNSD COMTRADE).
3 However, Egger et al.’s (2012) study indicates that the trade-inducing effect of migrants is strong when
the first migrants from a particular origin arrive, and then declines to zero for migrant stocks greater than
4000. A discussion on the comparative difference of African and Asian migrants is provided in “Appendix”.
4 Both the relative and absolute migration stocks of Asian migrants in developed countries are higher
than that of Africa. African countries’ migration is mainly within the low-wage African countries because
African migration is mainly driven by conflicts, environmental pressures and artificial borders. There is
relatively less migration from low-wage African countries to high-wage regions than migration within low-
wage Africa (Naudé 2010; Naudé and Bezuidenhout 2014). However, more workers from Asian countries
migrate to non-OECD countries (mainly within the region) as well. The skills of Asian migrants to OECD
and non-OECD countries differ. Unlike the non-OECD countries, labour migration to OECD countries is
mainly highly skilled (Xing et al. 2014). Given that migration is costly, most African migrants from low-
per-capita-income countries cannot travel too far (Naudé 2010). On the other hand, the absence of conflicts
and relatively better per capita income in Asian economies means that Asian migration is mainly driven by
the income effect.

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A comparative analysis of African and Asian migrants’… 2081

To the best of the author’s knowledge, this is the first paper that attempts a com-
parative assessment of African and Asian migrants’ effects on trade through carefully
addressing the issue of endogeneity due to omitted variable bias by incorporating
bilateral pair, exporter-year and importer-year fixed effects in the gravity model. The
dataset is also rich and consists of bilateral trade and bilateral migration stocks and
flows from a large sample of countries.
This paper is organised as follows. Section 2 provides a review of the related
literature. Section 3 deals with the data and methods. Section 4 presents the analysis,
while Sect. 5 concludes the paper.

2 Impact of migration on trade

The complementarity between trade and migration was recognised by trade economists
only a few decades ago (Head and Ries 1998; Gould 1994). Such complementarity has
been shown to prevail mostly for a trade where ethnic networks help to overcome infor-
mation problems (Rauch and Trindade 2002). However, doubts persist as to whether
trading partners’ cultural affinities or bilateral economic policies drive the observed
positive correlations (Lucas 2005; Hanson and McIntosh 2010; Hanson 2010).
The main channels through which migrants increase trade are through information
and the trust or contract-enforcement channel.5 Migrants provide relevant informa-
tion about available products and tastes for the right differentiated products, thus
reducing information costs, and as a result help to increase trade (Rauch 1996).
Migrant networks provide this trust through cultural proximity, repeated transactions
and knowledge of implicit business rules (Guiso et al. 2009). Migrants’ sheer presence
in the host country can be a catalyst to establish the required links to achieve efficient
distribution, procurement, transportation and satisfaction of regulations.6
Many studies have found a positive correlation between migration and trade using
augmented gravity models. The results of these studies reveal that the impact of a 10%
increase in migrant population ranges from a 0.1 to 2.5% rise in merchandise exports
and a 0.1–3.1% increase in merchandise imports (Felbermayr et al. 2010; Herander
and Saavedra 2005; Dunlevy 2006; White and Tadesse 2008; Hatzigeorgiou 2010;
Peri and Francisco 2010; Head and Ries 1998; Felbermayr and Toubal 2012; Girma
and Yi 2002; White 2007; Koenig 2009; Tai 2009).7
Nevertheless, the causality between migration and trade has yet to be conclusively
established (Felbermayr et al. 2012). The question of whether it is the trading partner’s
cultural affinity or bilateral economic policies that drive the observed positive corre-

5 Lack of information about international trade and investment opportunities is one of the informal barriers
to trade.
6 Migration may also facilitate the formation of the types of business links that lead to foreign direct
investment (FDI) project deployment in a particular location. In developing countries in particular, migrants
can be the bridge that solves uncertainties related to trade and investment opportunities. Migrants also affect
trade indirectly via technology and knowledge transfers.
7 The study on the effect of the average length of stay of a migrant in the host area by Herander and Saavedra
(2005) shows a positive effect on exports while its square has a negative effect.

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2082 S. Admassu

lations has not been established (Lucas 2005; Hanson 2010).8 In addition, migration
could also have a negative effect on bilateral trade when the trade substitution migra-
tion effect occurs. In other words, migrants can apply their knowledge of technology
or production methods and tastes and preferences to host country production or trans-
mit them to local producers in such a way that previously imported goods could be
substituted by local production (Rauch 1996).

3 Data and methods

3.1 Data

The paper uses a 10-year interval comprehensive database of 137 exporting countries
for the period 1970–2010. The nominal bilateral trade data are sourced from UN
COMTRADE, while nominal gross domestic product (GDP) comes from the World
Bank (WB) WDI database. Distance and other control variables are sourced from
CEPII, while the data for migration come from the WB’s global bilateral migration
database.9 The nominal data of export flow and GDP are scaled by exporter GDP
deflators to generate real trade flows and real GDPs. All the zero trade flows are
excluded. The total number of observations is 28,796.

3.2 Estimation method

It is well documented in the literature that the gravity model using bilateral pair,
exporter-year and importer-year fixed effects is likely to be the preferred gravity
specification because it controls time-variant multilateral resistance terms. The bilat-
eral migration rates from the same origin country to a destination are influenced by
the attractiveness of migration to other alternative destinations. The same applies to
the migration flows originating from different origins and directed to the same des-
tination country.10 Some of the factors that drive migration,11 such as differences
in the GDPs of the origin and destination countries of migrants may also affect
trade, resulting in the error term correlating with the variable of our interest-making
ordinary least squares (OLS) to provide biased estimations (Baier and Bergstrand
2007; Baldwin and Taglioni 2006). As a result, the OLS equation is likely to yield
biased estimates of the effects of migration on exports, because the explanatory vari-
ables of interest, such as Log(Migrationi jt ) ∗ Asia, Log(Migrationi jt ) ∗ Africa, and

8 Migrants are in a privileged position to provide information about distribution networks and about demand
in their home countries to host country exporters and vice versa (Rauch 1996; Greif 1993).
9 The global bilateral migrants’ stock database is a vast collection of destination country data sources
detailing migrant stock from numerous origin countries and regions. It is constructed by combining over
100 censuses and population register records (Ozden et al. 2011).
10 For example, the EU-type supranational level of coordination of visa policy at the destination country
and visa waivers depending on citizenship can influence the flow of migrants.
11 For example, a linguistic proximity that relies more closely on the country of birth and economic
conditions in the country of the last residence might also shape the incentives to migrate (Bertoli and
Moraga 2016; Hanson 2010; Bertoli et al. 2011; Bertoli and Moraga 2013).

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A comparative analysis of African and Asian migrants’… 2083

Log(Migrationi jt ) ∗ ROW may be correlated to the error term εi1jt due to endogeneity
resulting from the omitted variable bias.12 The OLS specification is shown in Speci-
fication (1).
       
Log Expi jt = β0 + β1 Log Gdpit + β2 Log Gdp jt + β3 Log Disti j
+ β4 Borderi j + β5 Languagei j + β6 Currencyi jt + β7 Landlockedi j + β8 RTAi jt
   
+ β9 Log Migrationi jt ∗ Asia + β10 Log Migrationi jt ∗ Africa
 
+ β11 Log Migrationi jt ∗ ROW + εi1jt (1)

where the variables are defined as follows: Log(Expi jt ), the log of country i export to
country j at time t; Log(GDPit ) and Log(GDP jt ), the GDP of country i and country
j at time t, respectively; Log(Disti j ), the log of distance between the trading pairs;
Contigi j , a dummy variable on whether the trading pairs share common borders;
Langi j , a dummy variable on whether the trading pairs have a common language;
Currencyi jt , a dummy variable on whether the trading pairs have a common currency;
Landlockedi j , a dummy variable on whether either the exporter or the importer or
both are landlocked countries; Log(Migrationi jt ), the log of the stock of migrants of
origin country i in the destination country j at time t; Log(Migrationi jt ) ∗ Asia, the
multiplication of the log of migration stock variable with Asia dummy that assumes
the value 1 if the country is the migrants origin country is in Asia and 0 otherwise;
Log(Migrationi jt ) ∗ Africa, the multiplication of the log of migration stock variable
with Africa dummy that assumes the value 1 if the country of origin of the migrant is
in Africa and 0 otherwise; Log(Migrationi jt ) ∗ ROW, the multiplication of the log of
migration stock variable with rest of the world (ROW) dummy that assumes the value
1 if the country of origin of the migrants is in the ROW and 0 otherwise.
Theoretically, omitted variables, simultaneity and measurement errors can cause
endogeneity. However, following Baier and Bergstrand’s (2007) argument, one can
argue that the most important source of endogeneity is the omitted variable (and selec-
tion) bias. Since migration is measured based on the count of people, the likelihood of
measurement error is of low concern and can be ruled out. While simultaneity bias is
probable,13 it may be argued to be less serious. Although the growth literature reveals
that the GDP is theoretically endogenous to bilateral trade flows, there are some def-
inite explanations that motivate a general disregard for the potential endogeneity of
GDP and export.14

12 The determinants of migration include origin- or destination-specific factors such as income, and other
dyadic factors such as networks that are correlated with unobserved cultural proximity of the pair countries
(Rauch 1999; Bertoli and Moraga 2016; Karemera et al. 2000; Pedersen et al. 2008; Kim and Cohen 2010)
also determine bilateral trade between pair countries. Hence, when left uncorrected, in gravity estimations,
the error term may represent unobserved heterogeneity in trade flow determinants associated with the
likelihood of migration.
13 The best option to resolve the problem of endogeneity is, of course, to construct an exogenous instrument
for migration which is a potential area for future research. This is beyond the scope of this study, and hence,
this research used the same method adopted in previous studies.
14 Three reasons: (1) GDP is a function of net multilateral exports, which on average tend to be less than
5% of a country’s GDP, and its connection to gross exports is much less direct; (2) the gravity equation

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2084 S. Admassu

 
Endogeneity (due to omitted variable bias) of Log Migrationi jt is addressed by
including bilateral pair (βi j ), exporter-year (βit ) and importer-year (βit ) dummies, as
shown in Eq. (2), which is the preferred specification. In a panel setting, the presence of
country-pair and country-year dummies can be employed to treat endogeneity arising
from the omission of multilateral resistance terms (Baier and Bergstrand 2007; Gil-
Pareja et al. 2014).15
     
Log Expi jt = β0 + βi j + βit + β jt + β1 Log Gdpit + β2 Log Gdp jt
 
+ β3 Log Disti j + β4 Borderi j + β5 Languagei j + β6 Currencyi jt
 
+ β7 Landlockedi j + β8 RTAi jt + β9 Log Migrationi jt ∗ Asia
   
+ β10 Log Migrationi jt ∗ Africa + β11 Log Migrationi jt ∗ ROW + εi2jt (2)

Regressions with specifications similar to Eqs. (1) and (2) were also run, with the
exception that the dependent variables were the log of imports. Additionally, this
paper estimates a Poisson pseudo-maximum-likelihood (PPML) regression where the
dependent variable of trade and migration is in levels to account for zero bilateral
trade and migration flows. The PPML regression addresses Santos Silva and Tenreyro’s
(2006) critique about bilateral trade datasets with zero trade flow and heteroscedasticity
issues.

4 Results

4.1 Migrants’ effects on exports

The OLS regression indicated in Eq. (1) was run, but the result table is not reported for
the sake of brevity; moreover, the coefficients of interest are biased and inconsistent.
Nevertheless, in line with the literature, the result of the regressions shows that the all
the standard gravity variables have the expected signs. The regression results reported
in Table 1 account for the issue of endogeneity that might arise due to the neglect of
multilateral price terms. The result does not empirically confirm that African migrants
cause exports, while it reveals that Asian migrants do.16 Specifically, Column 1 shows

Footnote 14 continued
relates bilateral trade flows to countries’ GDPs, which are a very small share of a country’s multilateral
exports; (3) previous studies indicate that the potential endogeneity of GDPs with export is insignificant
(Baier and Bergstrand 2007).
15 Anderson and Van Wincoop (2003) clarify that the omitted variable bias arises by disregarding multi-
lateral trade resistance terms that capture the idea that trade choices are established on relative rather than
absolute prices.
16 This might possibly be due to the labour movement, and social and human capital effects offset one
another. The recent literature shows that migration has labour movement (substitute trade) and social and
human capital movement (enhanced trade) effects. The labour movement effect reduces trade since it could
equalise wages if migration was undertaken on a massive scale. On the other hand, the social capital and
human capital movement effect increase trade since they provide market information. Hence, the net impact
of migration on trade thus depends on which effect has the most weight, since the two effects work together
to affect trade.

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Table 1 Regional differences in migrants’ effects on home country exports

Variables (1) (2) (3) (4) (5) (6)

 
Log Migrationi jt ∗ Asia 0.07*** 0.07*** 0.05*
(0.03) (0.03) (0.03)
 
Log Migrationi jt ∗ Africa − 0.03 − 0.04 − 0.06**
(0.03) (0.03) (0.03)
 
Log Migrationi jt ∗ ROW 0.02 0.02 − 0.00
(0.02) (0.01) (0.02)
 
Log Migrationi jt 0.01 0.03** 0.02
(0.01) (0.01) (0.02)
 
Log Migrationi jt ∗ High_inc_Dest 0.05***
(0.02)
 
Log Migrationi jt ∗ Other_Dest − 0.01
(0.02)
RTAi jt 0.62*** 0.62*** 0.62*** 0.62*** 0.61*** 0.61***
(0.06) (0.06) (0.06) (0.06) (0.06) (0.06)
Constant 13.63*** 13.93*** 13.94*** 13.67*** 16.13*** 16.13***
(0.27) (0.25) (0.35) (0.32) (0.07) (0.07)
Observations 28,796 28,796 28,796 28,796 28,606 28,606
The gravity equation includes
βi j + βit + β jt Yes Yes Yes Yes Yes Yes

Robust standard errors in parentheses. The dependent variable for specifications is the (natural log of
the) bilateral trade flow. βi j + βit + β jt are country-pair, exporter-year and importer-year fixed effects,
respectively
*** p < 0.01; ** p < 0.05; * p < 0.1

that a 10% rise in Asian migrant stock is more likely to rise the home to destination
export by 0.7%. The regional outlier countries in terms of income17 were also dropped,
but a similar conclusion was reached in this case. In addition, under Columns 3–5,
the variables of interest were estimated separately and a consistent conclusion was
reached; that is, African migrants are less likely to promote their home countries’
exports, while Asian migrants significantly promote their home countries’ export to
destinations (Table 1).
The literature shows that migration to high-income countries creates trade. To con-
firm this, a regression was run on the effect of migrants’ destination countries on
export, which reached a similar conclusion to earlier studies revealing that the model
adopted here is sound. As shown under Column 6, consistent with earlier studies, this
research established that migrants destined for high-income countries have a posi-
tive and significant effect on the migrants’ home countries exports. Specifically, this

17 The regional outliers are all North African countries and Hong Kong, Macao and Brunei Darussalam.

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Table 2 Migrants’ effect on exports by product type

Variables Export Agricultural Manufacturing Homogeneous Differentiated

(total) export export goods export goods export
 
Log Migrationi jt 0.02* − 0.02 0.04*** 0.15 0.04***
(0.01) (0.01) (0.01) (0.71) (0.01)
RTAi jt 0.68*** 0.60*** 0.40*** 0.65 0.55***
(0.06) (0.07) (0.06) (5.88) (0.06)
Constant 13.24*** 13.02*** 12.89*** 11.11*** 13.40***
(0.24) (0.37) (0.50) (2.32) (0.52)
Observations 34,620 24,729 26,705 1772 25,322
R-squared 0.55 0.45 0.65 0.97 0.66
The gravity equation includes
βi j + βit + β jt Yes Yes Yes Yes Yes

Robust standard errors in parentheses. The dependent variable for specifications is the (natural log of
the) bilateral trade flow. βi j + βit + β jt are country-pair, exporter-year and importer-year fixed effects,
respectively
*** p < 0.01; ** p < 0.05; * p < 0.1

research reveals that a 10% rise of migrants in high-income countries increases their
origin countries’ exports to high-income destinations by 0.5% (Table 1).
To show that the structure of the economies of migrants’ home countries is the main
factor that can enable migrants’ capability to produce exports, as well as a robustness
check measure, regressions were also run on the effect of migrants on the export of dif-
ferentiated products. In line with the literature, this paper also establishes that migrants
are more likely to promote the export of differentiated products than homogeneous
products and manufactured products rather than agricultural goods (Table 2).18 The
literature reveals that migrants are more likely to promote the export of differentiated
products than homogeneous products (Rauch and Trindade 2002; Bettin and Turco
2012).19
To focus on the main objective of the paper, a regression was also run to capture the
effects of African and Asian migrants on exports. The results are presented in Table 3,
which reveals that migrants’ effects on their home countries’ export of agricultural
goods are statistically insignificant. Asian migrants have significant and positive effects
on their home countries’ exports of manufactured and differentiated products, while
African migrants have a statistically insignificant effect. African migrants were also
found to have a positive and significant effect on homogeneous product exports, but the
value of the coefficient seems exaggerated, perhaps due to the sample size (Table 3).

18 The products are classified using the Rauch Classification of Goods frequently used in international
trade literature.
19 According to Bettin and Turco (2012), the south–north migration and trade reveal that migration enhances
the import of primary and final goods (preference channel), the export of differentiated goods, and low
elasticity of substitution goods (information channel). However, their study shows that there is no evidence
that migration influences the export of labour-intensive goods (technology channel).

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Table 3 Migrants’ effect on exports by region and product type

Variables Agricultural Manufactured Homogeneous Differentiated

goods goods goods goods
 
Log Migrationi jt ∗ Asia − 0.01 0.08*** − 14.59 0.05*
(0.03) (0.02) (8.31) (0.03)
 
Log Migrationi jt ∗ Africa − 0.02 − 0.02 2.73*** − 0.03
(0.03) (0.03) (0.84) (0.03)
 
Log Migrationi jt ∗ ROW − 0.02 0.04*** − 0.77 0.05***
(0.02) (0.01) (0.58) (0.01)
RTAi jt 0.60*** 0.39*** 7.73 0.54***
(0.07) (0.06) (4.52) (0.06)
Constant 13.04*** 12.73*** 14.96*** 13.46***
(0.31) (0.35) (3.01) (0.52)
Observations 24,729 26,705 1772 25,322
R-squared 0.45 0.65 0.99 0.66
The gravity equation includes
βi j + βit + β jt Yes Yes Yes Yes

Robust standard errors in parentheses. The dependent variable for specifications is the (natural log of
the) bilateral trade flow. βi j + βit + β jt are country-pair, exporter-year and importer-year fixed effects,
respectively
*** p < 0.01; ** p < 0.05; * p < 0.1

Given that African economies have a relatively weak industrial base, these findings
are highly plausible. In other words, the nature and structure of the African export
sector explain why African migrants have a positive and significant effect on the
export of homogeneous products. A close investigation of the major export items
from African and Asian countries strengthens this study’s findings. African exports
are predominantly comprised of homogeneous goods, while Asian countries export
more differentiated and manufactured products. For example, the percentage share of
food products export by Africa in 1990 was 48%,20 while the figure for the Asian
region was significantly lower.
As an additional robustness check measure, PPML model regressions were also run
with country-pair, exporter-year and importer-year fixed effects to take into account the
issue of zero trade and migration flows. The result of the PPML model also confirmed
that African migrants do not have a statistically significant impact on exports, while
Asian migrants do. When products are classified into categories, the results show
that African migrants tend to promote homogeneous products, while Asian migrants
facilitate the export of manufactured and differentiated products (Table 4).

20 As the data in the WB database http://wits.worldbank.org reveals, the structure of African exports is the
same today.

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2088 S. Admassu

Table 4 PPML regression, accounting for zero export and migrant flows

Variables Total Agricultural Manufactured Homogeneous Differentiated

goods goods goods goods
 
Log Migrationi jt ∗ Asia 0.05*** 0.01 0.07*** 0.02 0.04***
(0.03) (0.03) (0.05) (0.05) (0.02)
 
Log Migrationi jt ∗ Africa 0.01 0.01 0.03 0.33*** 0.01
(0.03) (0.01) (0.04) (0.02) (0.05)
 
Log Migrationi jt ∗ ROW 0.04 0.02 0.03*** 0. 01 0.03***
(0.06) (0.03) (0.01) (0.04) (0.01)
RTAi jt 0.34*** 0.34*** 0.59*** 0.15* 0.76***
(0.01) (0.03) (0.02) (0.14) (0.01)
Observations 75,518 57,356 67,008 10,594 64,267
The gravity equation includes
βi j + βit + β jt Yes Yes Yes Yes Yes

Robust standard errors in parentheses. The dependent variable is the real bilateral trade flow in level from
country i to country j. βi j + βit + β jt are country-pair, exporter-year and importer-year fixed effects,
respectively
*** p < 0.01; ** p < 0.05; * p < 0.1.

4.2 Migrants’ effects on imports

The information advantage—and hence reductions in transaction costs—enables

migrants to facilitate both exports from, and imports to, the migrants’ home countries.
The literature reveals that migrants not only promote their home countries’ exports to
a destination but also facilitate imports from their home country to their destination
countries (Head and Ries 1998; Girma and Yi 2002). This paper also confirms that
migrants also positively and statistically significantly impact imports to the migrants’
home country from their destination countries.
The results establish that migrants’ effect on their home countries’ imports is
stronger for manufactured products. Specifically, a 10% increase in the stock of
migrants results in a 0.4% increase in imports of manufactured goods from the
migrants’ destinations. Migrants also affect their home countries’ total imports, as
well as their differentiated, manufactured, and agricultural product imports (Table 5).
Given the aim of the paper is to compare the import creation effect of African and
Asian migrants, a regression that captures this was run and the results are presented
in Table 6, which reveals that the effect on import of total and manufactured goods
is positive and statistically significant in all regions. Given the structure of Africa’s
imports, these results are plausible (Table 6).21

21 Most of Africa’s imports are composed of manufactured products, which constitute approximately 65%
of Africa’s imports (UN COMTRADE). Given that African countries have weaker industrial bases and
the neoclassical trade theories, Africa’s import basket should rightly contain relatively more manufactured
goods imported from regions with more developed and more complex industrial bases.

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Table 5 Migrants’ effect on imports by product type

Variables Import Differentiated Homogeneous Manuf. Agric.

(total) goods import goods import import import
 
Log Migrationi jt 0.03*** 0.02** 0.17 0.04*** 0.02*
(0.01) (0.01) (0.32) (0.01) (0.01)
RTAi jt 0.64*** 0.60*** 1.06 0.43*** 0.68***
(0.06) (0.06) (5.46) (0.06) (0.07)
Constant 14.45*** 13.21*** 10.54*** 13.96*** 13.58***
(0.23) (0.33) (1.31) (0.43) (0.45)
Observations 26,934 24,938 1996 25,601 24,071
R-squared 0.58 0.66 0.94 0.66 0.46
The gravity equation includes
βi j + βit + β jt Yes Yes Yes Yes Yes

Robust standard errors in parentheses. The dependent variable for specifications is the (natural log of
the) bilateral trade flow. βi j + βit + β jt are country-pair, exporter-year and importer-year fixed effects,
respectively
*** p < 0.01; ** p < 0.05; * p < 0.1

Table 6 Migrants’ effects on import by region and product type

Variables Import Differentiated Homogeneous Manuf. Agric.

(total) goods goods goods goods
 
Log Migrationi jt ∗ Asia 0.08** 0.11*** 1.30 0.07** 0.04
(0.03) (0.04) (0.99) (0.04) (0.04)
 
Log Migrationi jt ∗ Africa 0.06** − 0.03 − 0.43 0.07** − 0.01
(0.03) (0.04) (0.97) (0.03) (0.04)
 
Log Migrationi jt ∗ ROW 0.02* 0.02* 0.26 0.03*** 0.03*
(0.01) (0.01) (0.35) (0.01) (0.01)
RTAi jt 0.64*** 0.60*** 0.10 0.43*** 0.68***
(0.06) (0.06) (5.51) (0.06) (0.07)
Constant 14.52*** 13.79*** 11.00*** 13.63*** 13.54***
(0.20) (0.53) (1.34) (0.35) (0.48)
Observations 26,934 24,938 1996 25,601 24,071
R-squared 0.58 0.66 0.94 0.66 0.46
The gravity equation includes
βi j + βit + β jt Yes Yes Yes Yes Yes

Robust standard errors in parentheses. The dependent variable for specifications is the (natural log of
the) bilateral trade flow. βi j + βit + β jt are country-pair, exporter-year and importer-year fixed effects,
respectively
*** p < 0.01; ** p < 0.05; * p < 0.1

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2090 S. Admassu

Table 7 PPML regression, accounting for zero import and migrant flows

Variables Import Agricultural Manufactured Homogeneous Differentiated

Total goods goods goods goods
 
Log Migrationi jt ∗ Asia 0.06*** 0.06 0.06*** 0.35 0.12***
(0.01) (0.07) (0.04) (0.56) (0.05)
 
Log Migrationi jt ∗ Africa 0.04*** 0.02 0.04*** 0.37 0.07***
(0.02) (0.03) (0.02) (0.45) (0.04)
 
Log Migrationi jt ∗ ROW 0.02*** 0.02*** 0.02*** 0.27 0.03***
(0.01) (0.01) (0.01) (0.35) (0.02)
RTAi jt 0.39*** 0.35*** 0.58*** 0.14 0.76***
(0.001) (0.02) (0.01) (0.20) (0.15)
Observations 77,699 57,356 67,008 10,594 64,267
The gravity equation includes
βi j + βit + β jt Yes Yes Yes Yes Yes

Robust standard errors in parentheses. The dependent variable is the real bilateral trade flow in level from
country i to country j. βi j + βit + β jt are country-pair, exporter-year and importer-year fixed effects,
respectively
*** p < 0.01; ** p < 0.05; * p < 0.1

The result of the PPML model also confirms that both African and Asian migrants
have a positive and statistically significant impact on imports. Further, the results reveal
that both African and Asian migrants promote imports of both total and differentiated
products from their destination countries (Table 7).
This paper’s findings are comparable to the findings of earlier similar studies. The
literature reveals that a 10% increase in migrant stock raises exports from 0.1 to 2.5%
and imports from 0.1 to 3.1% (Felbermayr et al. 2010; Herander and Saavedra 2005;
White and Tadesse 2008; Hatzigeorgiou 2010; Peri and Francisco 2010; Head and
Ries 1998; Felbermayr and Toubal 2012; Girma and Yi 2002; White 2007; Koenig
2009; Tai 2009).

5 Conclusion

This paper investigates African and Asian migrants’ export and import creation effects
using a gravity model on a 10-year interval panel dataset of 136 countries for the
period ranging from 1970 to 2010. The results reveal that African migrants do not
have a statistically significant impact on exports, while Asian migrants do. The results
show that a 10% increase in the stock of Asian migrants increases exports by 0.7%.
On the other hand, both African and Asian migrants have a positive and statistically
significant impact on imports. When products are classified into categories, the result
shows that African migrants tend to promote homogeneous products, while Asian
migrants facilitate the export of manufactured and differentiated products. Further,
the results reveal that both African and Asian migrants promote imports of both total

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A comparative analysis of African and Asian migrants’… 2091

and differentiated products into their destination countries. Given the differences in
the structure of the export sectors, it is plausible to conclude that the home countries’
economic structure strongly influences migrants’ ability to work as bridges between
traders from their home and destination countries.

Appendix

A1. List of countries

Asian Bangladesh, Brunei Darussalam, Cambodia, China, Fiji, Guinea, Hong Kong
SAR, India, Indonesia, Kiribati, Macao SAR, Malaysia, Myanmar, Nepal, Pakistan,
Papua New Guinea, Philippines, Samoa, Solomon Islands, Sri Lanka, Thailand, Tonga,
Vanuatu and Vietnam.
African Algeria, Angola, Benin, Burkina Faso, Cabo Verde, Cameroon, Central
African Republic, Congo, Cote d’Ivoire, Ethiopia, Egypt, Gabon, Gambia, Ghana,
Kenya, Liberia, Libya, Madagascar, Malawi, Mali, Mauritania, Mauritius, Morocco,
Niger, Nigeria, Senegal, Seychelles, Somalia, Sudan, Togo, Tanzania, Tunisia, Zambia
and Zimbabwe.
ROW Argentina, Australia, Austria, Bahamas, Bahrain, Barbados, Belgium, Belize,
Bermuda, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Cuba, Cyprus,
Czech Republic, Denmark, Dominica, Ecuador, El Salvador, Faroe Islands, Finland,
Germany, France, French Guiana, French, Polynesia, Greece, Greenland, Grenada,
Guadeloupe, Guatemala, Guyana, Haiti, Honduras, Hungary, Iceland, Iran, Ireland,
Israel, Italy, Jamaica, Japan, Jordan, Kuwait, Lebanon, Malta, Martinique, Mexico,
Netherlands, New Caledonia, New Zealand, Nicaragua, Norway, Oman, Panama,
Paraguay, Peru, Poland, Portugal, Qatar, Republic of Korea, Saint Lucia, St. Vincent
and the Grenadines, Saudi Arabia, Singapore, Spain, Suriname, Sweden, Switzerland,
Syria, Trinidad and Tobago, Turkey, USA, United Arab Emirates, UK, Uruguay and
Venezuela.

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