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Immigration and International Trade  

Katharina Erhardt and Andrea Lassmann

International trade involves the movement of goods across borders, while immigration pertains to the movement of people across national boundaries. These two phenomena are strongly correlated. To some extent, the similarity between barriers to trade and migration explains this correlation, with distance being a crucial factor in both trade and migration. Geographically closer countries tend to engage in both trade and migration because of closer cultural connections. Immigration is itself also an important determinant of trade flows. Migrant networks play a vital role in reducing trade barriers by improving information sharing and facilitating business connections. This, in turn, leads to an increase in both exports and imports between countries. As trade increasingly relies on efficient firm and supplier matching, particularly within global supply chains, the influence of migrant networks becomes more significant. Finally, immigration also drives demand for goods and services from migrants’ home countries. Migrants often maintain strong ties to their home countries and prefer consuming products and services from those regions. This preference fosters increased bilateral trade flows between the home country and the country of immigration. In summary, international trade and immigration are closely linked, and understanding the interplay between international trade and immigration is crucial for comprehending the dynamics of the global economy.