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Migrants, Ancestors, and Foreign Investments
Stockholm University, Faculty of Social Sciences, Institute for International Economic Studies. Bureau for Research and Economic Analysis of Development (BREAD), UK; Centre for Economic Policy Research (CEPR), UK.
Number of Authors: 32019 (English)In: The Review of Economic Studies, ISSN 0034-6527, E-ISSN 1467-937X, Vol. 86, no 4, p. 1448-1486Article in journal (Refereed) Published
Abstract [en]

We use 130 years of data on historical migrations to the U.S. to show a causal effect of the ancestry composition of U.S. counties on foreign direct investment (FDI) sent and received by local firms. To isolate the causal effect of ancestry on FDI, we build a simple reduced-form model of migrations: Migrations from a foreign country to a U.S. county at a given time depend on (1) a push factor, causing emigration from that foreign country to the entire U.S., and (2) a pull factor, causing immigration from all origins into that U.S. county. The interaction between time-series variation in origin-specific push factors and destination-specific pull factors generates quasi-random variation in the allocation of migrants across U.S. counties. We find that doubling the number of residents with ancestry from a given foreign country relative to the mean increases the probability that at least one local firm engages in FDI with that country by 4 percentage points. We present evidence that this effect is primarily driven by a reduction in information frictions, and not by better contract enforcement, taste similarities, or a convergence in factor endowments.

Place, publisher, year, edition, pages
2019. Vol. 86, no 4, p. 1448-1486
Keywords [en]
Migrations, Foreign directinvestment, International trade, Networks, Social ties
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:su:diva-176630DOI: 10.1093/restud/rdy044ISI: 000493307200003OAI: oai:DiVA.org:su-176630DiVA, id: diva2:1381755
Available from: 2019-12-27 Created: 2019-12-27 Last updated: 2019-12-27Bibliographically approved

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CiteExportLink to record
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Citation style
  • apa
  • ieee
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  • Other style
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Language
  • de-DE
  • en-GB
  • en-US
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  • nn-NO
  • nn-NB
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Output format
  • html
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  • asciidoc
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