International trade and migration linkages between Africa and its trading partners

Abstract: This study investigates the relationship between trade and migration between Africa and its trading partners. There are two key hypotheses to be tested (i) the extent to which migration induces trade between Africa and its trading partners, (ii) whether migration impacts more on exports than on imports. This study builds on existing empirical studies on the immigration-trade nexus by estimating an amended gravity model, accounting for Multilateral Trade Resistance terms, distance, contiguity, common language, trading partners’ access to the ocean (landlocked exporters and importers), and addresses the issue of zero trade flows and heteroscedasticity by using the Poisson Pseudo-Maximum Likelihood. Panel data on migrant stock and trade flows is employed to investigate the extent to which migration impacts trade on a set of 52 African countries and 116 trading partners. Employing the Poisson Pseudo-Maximum Likelihood to estimate the Gravity Model on trade, the empirical results prove that migration (sending and receiving migrants) has a positive impact on all our trade components (import, export, and total trade). A 1% increase in sending migrants (Immigrant_ij) increases imports, exports, and total trade by 0.103 %, 0.14%, and 0.114% respectively. At the same time, a 1% increase in receiving migrants (Immigrant_ji) induces imports, exports, and total trade by 0.067%, 0.09%, and 0.084% respectively. As in many other studies, the findings of this study clearly demonstrate that migration between Africa and its trading partners enhances trade with a greater impact on exports than on both imports and total trade.M.Com. (Development Economics