Migration and export performance: The role of the diaspora remittances

Abstract

Migration and international trade represent two fundamental and interconnected aspects of globalization. This paper studies the impact of migration on bilateral trade, using data for remittances as a proxy for migrants in an augmented panel data gravity model framework. Using data for Portuguese bilateral trade with 187 countries for the period 2008-2017, and controlling for other determinants of trade through a standard gravity model, we find that there is a significant impact of remittances on bilateral trade both in terms of exports and imports, particularly regarding some specific types of goods. The evidence of a significant relation between migration and trade has important implications, since it can provide policymakers an alternative option to promote trade and internationalization beyond conventional trade policy.