Immigration and Trade in Portugal: A Static and Dynamic Panel Data Analysis

Horácio Faustino () and Nuno Leitão

No 2008/31, Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa

Abstract: This article tests the relation between immigration and Portuguese bilateral trade, considering the fifteen European partners (EU15). Using a static and dynamic panel data analysis, the results show that the stock of immigrants has a positive effect on Portuguese exports, imports and bilateral intra-industry trade. These results suggest that immigration affects all types of trade in a positive way. The underlying assumption is that immigration contributes to decrease the costs of transactions, which in turn promotes all trade flows. The static and dynamic results do not confirm the hypothesis of a negative effect of immigration on Portuguese exports. In the static model, a 10% increase in immigration induces a 5.98 % increase in exports and a 5.55% increase in imports. The effect on the Portuguese trade balance is positive. However, the dynamic results for the export and import equations are more reliable, showing a smaller positive effect on exports. A 10% increase in bilateral immigration induces a 0.47% and 2.34% increase in exports and imports, respectively. Our findings also suggest that when immigrants to Portugal originate from a Latin partner-country, the effects on trade are stronger than in the case of immigrants from non-Latin countries. The study is based on an extended gravitational model, in order to incorporate the qualitative factors as control variables.

Keywords: intra-industry trade; immigration; gravity model; panel data; Portugal. (search for similar items in EconPapers)
JEL-codes: C33 F11 F12 F22 (search for similar items in EconPapers)
Date: 2008-07
New Economics Papers: this item is included in nep-eec, nep-int, nep-lab and nep-mig
References: Add references at CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
https://depeco.iseg.ulisboa.pt/wp/wp312008.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ise:isegwp:wp312008

Access Statistics for this paper

More papers in Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa Department of Economics, ISEG - Lisbon School of Economics and Management, Universidade de Lisboa, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL.
Bibliographic data for series maintained by Vitor Escaria ().