Migrant Networks and Foreign Direct Investment

While there exists sizeable literature documenting the importance of ethnic networks for international trade, little attention has been devoted to studying the effects of networks on foreign direct investment (FDI). The existence of ethnic networks may positively affect FDI by promoting information...

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Bibliographic Details
Main Authors:	Javorcik, Beata S., Özden, Çağlar, Spatareanu, Mariana, Neagu, Cristina
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2012
Subjects:	ARMED CONFLICT ASSETS BILATERAL TRADE BRAIN-DRAIN CITIES CITIZENS CONSUMER PREFERENCES CONSUMERS COUNTRIES OF ORIGIN COUNTRY OF ORIGIN DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DIASPORA ECONOMIC GROWTH ECONOMIC STATUS ECONOMICS RESEARCH EDUCATED MIGRANTS ELASTICITY EMIGRATION EMPLOYMENT OPPORTUNITIES ETHICS EXPORTS FOREIGN DIRECT INVESTMENT GDP GDP PER CAPITA HOST COUNTRIES HOST COUNTRY IMMIGRANT IMMIGRATION IMPLICIT CONTRACT INFLATION INTERNATIONAL BORDERS INTERNATIONAL MIGRATION INTERNATIONAL MOBILITY INTERNATIONAL TRADE LABOR MARKET LAND OWNERSHIP MACROECONOMIC STABILITY MARRIED WOMEN MIGRANT MIGRANTS MIGRATION MIGRATION FLOWS NATIONAL BOUNDARIES NUMBER OF MIGRANTS PEACE POLICY RESEARCH POLICY RESEARCH WORKING PAPER POPULATION CENTER POPULATION DENSITY POPULATION INCREASES POPULATION SIZE PROGRESS PROVISION OF INFORMATION PURCHASING POWER PUSH FACTOR REGULATORY REGIMES REMITTANCES REMITTANCES FROM MIGRANTS RESPECT RETURN MIGRATION RETURNEE RULE OF LAW RURAL POPULATIONS SECONDARY EDUCATION SKILLED MIGRANTS SKILLED WORKERS SOCIAL NETWORKS TERTIARY EDUCATION TRADE BARRIERS TRANSPORTATION UNMARRIED WOMEN WAGES
Online Access:	http://documents.worldbank.org/curated/en/2006/11/7154722/migrant-networks-foreign-direct-investment http://hdl.handle.net/10986/9023

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Summary:	While there exists sizeable literature documenting the importance of ethnic networks for international trade, little attention has been devoted to studying the effects of networks on foreign direct investment (FDI). The existence of ethnic networks may positively affect FDI by promoting information flows across international borders and by serving as a contract enforcement mechanism. This paper investigates the link between the presence of migrants in the United States and U.S. FDI in the migrants' countries of origin, taking into account the potential endogeneity concerns. The results suggest that U.S. FDI abroad is positively correlated with the presence of migrants from the host country. The data further indicate that the relationship between FDI and migration is driven by the presence of migrants with a college education.

Migrant Networks and Foreign Direct Investment

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