Using the Gravity Equation to Explain the Portuguese Immigration-trade Link

• Autor(es): Faustino, Horácio C. ; Leitão, Nuno Carlos
• Data: 2008
• Identificador Persistente: http://hdl.handle.net/10400.5/2337
• Origem: Repositório da UTL
• Assunto(s): intra-industry trade; immigration; gravity model; panel data
• Tipo de Documento: Outro
• Idioma: Inglês

Descrição

This paper tests the relation between immigration and Portuguese bilateral trade. Using a panel data analysis, the results show that the stock of immigrants has a positive effect on Portuguese exports, imports and bilateral intra-industry trade. The underlying assumption is that immigration contributes to decrease the costs of transactions, which in turn promotes trade flows. The results do not confirm the hypothesis of a negative effect of immigration on Portuguese exports. Our findings suggest that when immigrants to Portugal come from a Latin partner-country, the effects on trade are stronger than in the case of immigrants from non-Latin countries. The study is based on an extended gravitational model, in order to incorporate the qualitative factors as control variables.