The trade-enhancing effect of immigration networks: New evidence on the role of geographic proximity

We use migration-trade data from Italian, Portuguese and Spanish provinces to examine the importance of geographic proximity in the effectiveness of ethnic networks on bilateral trade. Empirical findings from the gravity model show that the migration-trade link is clearly in-province: exports from a province to a country do not receive any stimuli from immigrants from this country living outside of the province, once we control for country-province time-invariant fixed effects.

► We find that geographic proximity matters to explain the migration-trade link. ► We use the gravity equation with province panel data from Italy, Spain and Portugal. ► OLS regressions show that all migrants affect province international exports. ► In-province migrants exhibit greater impact than those living in adjacent provinces. ► In panel regression only in-province migrants affect positively province's exports.