Immigration Potentially Promoting Exports of Trade in Services

By Victoria Hines

A discussion paper released by the Centre for Economic Performance suggests that “immigrants promote exports of final services, both overall and particularly to their countries of origin.” Moreover, the effects appear to be even stronger when trading partners share cultural and institutional similarities. A potential explanation for this finding is that immigrants reduce exporting or importing costs of services by helping their home country overcome cultural and institutional barriers with foreign markets. Not only are trade costs reduced, but immigrants can also increase productivity by contributing their specialization and creativity.