Harnessing migrant networks could boost trade, says study

Widening the migration net would help trade, says the new NZIER report.

Immigration boosts trade and tourism with migrants' home countries, and policymakers should recognise the value of that connective tissue, a new study says.

The research by economists David Law, Murat Genc and John Bryant, funded by the New Zealand Institute of Economic Research, says that one promising way of fostering international trade is to harness the business knowledge, language skills and social and commercial networks of migrants.

New Zealand is well placed to do this as nearly one in four residents was born overseas and there is a large Kiwi diaspora.

NZIER chief executive Jean-Pierre de Raad said the research had implications for immigration policy. At present, it focuses on filling skill shortages and factors, such as work experience, job offers and educational qualifications.

"A heavy emphasis on good English is understandable. But this research points to the benefits to trade [from casting the net wider] and if we don't take those into account we might be forgoing some benefits. It could be given more weight."

To test the hypothesis that migration stimulates trade, the economists assembled 26 years' worth of data for a large number of countries and controlled for other factors expected to influence trade flows, like size, distance, colonial links and changes to transport and communications technology.

They found that if New Zealand received 10 per cent more migrants from a particular country, exports to that country grew 0.6 per cent and imports from it by 1.9 per cent.

The effect is stronger for non-commodity goods and stronger for developing countries where transaction costs tend to be higher. These are attractive properties, they argue. Developing countries have been growing more quickly than rich ones and there have been calls for New Zealand to expand non-commodity exports.

The scope for gains is probably greater for immigrants than emigrants, they conclude, because the Kiwi diaspora tends to be concentrated in Australia, Britain and the United States where there are fewer barriers and the scope for further reducing transaction costs is lower.

The impact on visitor flows is stronger, with a 10 per cent increase in migrants associated with a 2.2 per cent increase in inbound and 4.2 per cent increase in outbound tourism. "And that's tourists proper, holidaymakers, not people visiting friends and family," de Raad said.