Leadership

Product Complexity, Quality Of Institutions And the Pro-Trade Effect Of Immigrants

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Executive Summary

The paper assesses the trade-creating impact of foreign-born residents on the international imports and exports of the French regions where they are settled. The pro-trade effect of immigrants is investigated along two intertwined dimensions: The complexity of traded goods and the quality of institutions in partner countries. The trade-enhancing impact of immigrants is, on average, more salient when they come from a country with weak institutions. However, this positive impact is especially large on the imports of simple products. When we turn to complex goods, for which the information channel conveyed by immigrants is the most valuable, immigration enhances imports regardless of the quality of institutions in the partner country. Regarding exports, immigrants substitute for weak institutions on both simple and complex goods.

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