Swiss Journal of Economics and Statistics

, Volume 148, Issue 3, pp 449–476 | Cite as

How migrant networks facilitate trade: Evidence from Swiss exports

  • Pierre-Louis Vézina
Open Access


This paper uses Swiss immigration data and two novel instrumental variables to test the channels through which migrants promote trade. Using the immigrant stock in France as well as Swiss visa restrictions as instruments for the immigrant stock in Switzerland, I am able to exploit the cross-sectional nature of the data and identify a causal protrade effect. I find robust evidence of a protrade effect that takes place entirely on the extensive margin, i.e. on the number of exported products rather than the value of exports. This suggests migrant networks reduce beachhead costs. I also find that migrants can act as substitute for formal institutions, but not so for goods sold on organised markets. This suggests either that differentiated products are not only search- but also trust-intensive or that migrants substitute for institutions by providing information rather than trust.


F22 F14 D73 D8 


trade migration corruption 


  1. Anderson, James E., and Douglas S. J. Marcouiller (2002), “Insecurity and the Pattern of Trade: An Empirical Investigation”, Review of Economics and Statistics, 84: pp. 342–352.CrossRefGoogle Scholar
  2. Anderson, James E., and Eric van Wincoop (2003), “Gravity with Gravitas: A Solution to the Border Puzzle”, American Economic Review, American Economic Association, 93(1), pp. 170–192, March.CrossRefGoogle Scholar
  3. Bandyopadhyay, Subhayu, Cletus C. Coughlin, and Howard J. Wall, (2007), “Ethnic Networks and U.S. Exports”, Working Papers 2005-069, Federal Reserve Bank of St. Louis.Google Scholar
  4. Bernstein William J. (2008), A Splendid Exchange: How Trade Shaped the World, Atlantic Monthly Press.Google Scholar
  5. Chaney, Thomas (2008), “Distorted Gravity: The Intensive and Extensive Margins of International Trade”, American Economic Review, American Economic Association, 98(4), pp. 1707–21, September.CrossRefGoogle Scholar
  6. Broda, Christian, and David E. Weinstein (2006), “Globalization and the Gains from Variety”, The Quarterly Journal of Economics, MIT Press, 121(2), pp. 541–585, May.CrossRefGoogle Scholar
  7. Coughlin, Cletus C and Wall, Howard J. (2011), Ethnic Networks and Trade: Intensive vs. Extensive Margins, unpublished.Google Scholar
  8. Dunlevy, James A. (2006), “The Influence of Corruption and Language on the Protrade Effect of Immigrants: Evidence from the American States,” The Review of Economics and Statistics, MIT Press, 88(1), pp. 182–186, July.CrossRefGoogle Scholar
  9. Egger, Peter, Von Ehrlich, Maximilian, and Nelson, Douglas R. (2012), “Migration and Trade”, The World Economy, Wiley Blackwell, 35(2), pp. 216–241, 02.CrossRefGoogle Scholar
  10. Felbermayr, Gabriel J., and Toubal, Farid (2008), Revisiting the Trade-Migration Nexus: Evidence from New OECD Data.Google Scholar
  11. Felbermayr, Gabriel J, Benjamin Jung and Farid Toubal (2009), “Ethnic Networks, Information, and International Trade: Revisiting the Evidence”, 306/2009, Department of Economics, University of Hohenheim, Germany.Google Scholar
  12. Girma, Sourafel, and Zhihong Yu (2002), “The Link between Immigration and Trade: Evidence from the United Kingdom”, Weltwirtschaftliches Archiv-Review of World Economics, 138, 1, pp. 115–130.CrossRefGoogle Scholar
  13. Gould, David M. (1994), “Immigrant Links to the Home Country: Empirical Implications for U.S. Bilateral Trade Flows”, The Review of Economics and Statistics, MIT Press, 76(2), pp. 302–316, MayCrossRefGoogle Scholar
  14. Greif, Avner (1993), “Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders’ Coalition”, American Economic Review, American Economic Association, 83(3), pp. 525–548, June.Google Scholar
  15. Guiso, Luigi, Sapienza, Paola, and Zingales, Luigi (2009), “Cultural Biases in Economic Exchange”, Quarterly Journal of Economics, MIT Press, 124, No. 3.Google Scholar
  16. Hatzigeorgiou, Andreas (2010), “Migration as Trade Facilitation: Assessing the Links between International Trade and Migration”, The B. E. Journal of Economic Analysis & Policy, 10: Iss. 1 (Topics), Article 24.Google Scholar
  17. Head, Keith, and John Ries (1998), “Immigration and Trade Creation: Econometric Evidence from Canada”, Canadian Journal of Economics, Canadian Economics Association, 31(1), pp. 47–62, FebruaryCrossRefGoogle Scholar
  18. Herander, Mark G., and Luz A. Saavedra (2005), “Exports and the Structure of Immigrant-Based Networks: The Role of Geographic Proximity,” Review of Economics and Statistics 87: pp. 323–335.CrossRefGoogle Scholar
  19. Javorcik, Beata S., Ozden, Caglar, Spatareanu, Mariana, and Neagu, Cristina (2011), “Migrant Networks and Foreign Direct Investment”’, Journal of Development Economics, Elsevier, 94(2), pp. 231–241, March.CrossRefGoogle Scholar
  20. Kandogan Yener (2009), “Immigrants, Cross-Cultural Communication and Export Performance: The Swiss Case”, European Journal of International Management, 3, 3, pp. 393–410.CrossRefGoogle Scholar
  21. Kaufmann, Daniel, Kraay, Aart and Mastruzzi, Massimo (2010), “The Worldwide Governance Indicators: Methodology and Analytical Issues”, World Bank Policy Research Working Paper No. 5430.Google Scholar
  22. Koenig, Pamina (2009), “Immigration and the Export Decision to the Home Country”, PSE Working Papers 2009-31, PSE.Google Scholar
  23. McKenzie, David (2007), “Paper Walls Are Easier to Tear Down: Passport Costs and Legal Barriers to Emigration”, World Development, Elsevier, 35(11), pp. 2026–2039, November.CrossRefGoogle Scholar
  24. Mullahy, John (1997), “Instrumental-Variable Estimation of Count Data Models: Applications to Models of Cigarette Smoking Behavior”, The Review of Economics and Statistics, 79(4): pp. 586–593.CrossRefGoogle Scholar
  25. Neumayer, Eric (2006), “Unequal Access to Foreign Spaces: How States Use Visa Restrictions to Regulate Mobility in a Globalised World”, Transactions of the British Institute of Geographers 31 (1), pp. 72–84.CrossRefGoogle Scholar
  26. Nichols, Austin (2007), “IVPOIS: Stata Module to Estimate an Instrumental Variables Poisson Regression via GMM”, available online at
  27. Parsons, R. Christopher, Ronald Skeldon, Terrie L. Walmsley, and L. Alan Winters (2007), “Quantifying International Migration: A Database of Bilateral Migrant Stocks”, World Bank Policy Research Working Paper 4165. March.Google Scholar
  28. Peri, Giovanni, and Francisco Requena (2010), “The Trade Creation Effect of Immigrants: Evidence from the Remarkable Case of Spain”, Canadian Journal of Economics, Canadian Economics Association, 43(4), pp. 1433–1459, November.CrossRefGoogle Scholar
  29. Rauch, James E. (1996), “Trade and Search: Social Capital, Sogo Shosha, and Spillovers”, NBER Working Papers 5618, National Bureau of Economic Research, Inc.Google Scholar
  30. Rauch, James E. (1999), “Networks versus Markets in International Trade”, Journal of International Economics, Elsevier, 48(1), pp. 7–35, June.CrossRefGoogle Scholar
  31. Rauch, James E. (2001), “Business and Social Networks in International Trade”, Journal of Economic Literature, American Economic Association, 39(4), pp. 1177–1203, December.CrossRefGoogle Scholar
  32. Rauch, James E., and Vítor Trindade (2002), “Ethnic Chinese Networks In International Trade”, The Review of Economics and Statistics, MIT Press, 84(1), pp. 116–130, February.CrossRefGoogle Scholar
  33. Santos Silva, J. M. C., and Silvana Tenreyro (2006), “The Log of Gravity”, The Review of Economics and Statistics, MIT Press, 88(4), pp. 641–658, 09.CrossRefGoogle Scholar
  34. Tai, Silvio H. T. (2009), “Market Structure and the Link between Migration and Trade”, Review of World Economics, 145, 2, pp. 225–249.CrossRefGoogle Scholar
  35. White, Roger, and Tadesse, Bedassa (2008), “Cultural Distance and the US Immigrant-Trade Link”, The World Economy, 31, Issue 8, pp. 1078–1096.CrossRefGoogle Scholar
  36. White, Roger (2007), “An Examination of the Danish Immigrant Trade Link”, International Migration 45(5): pp. 61–86.CrossRefGoogle Scholar

Copyright information

© Swiss Society of Economics and Statistics 2012

Authors and Affiliations

  1. 1.OxCarre and Department of EconomicsUniversity of OxfordUK

Personalised recommendations