Which Immigrants Promote Trade with Third Party Countries? On the Role of Geographic and Linguistic Proximity

Abstract

This study investigates how geographic and linguistic characteristics of immigrants’ origin countries affect the spillover effect on trade with third party countries. The results provide clear evidence of an inter-ethnic spillover effect and, within it, separately identify the role of spoken language, official language, and geographic proximity of the origin country to the trading partner. We also distinguish the ethnic spillover effect from the inter-ethnic spillover effect by focusing on the role of native tongue. Lastly, we document a trade diversion effect by immigrants who are neither geographically nor linguistically close to the trading partner country.