Migration, Knowledge Diffusion and the Comparative Advantage of Nations

The diffusion of tacit knowledge involves direct human interactions. This implies that the international diffusion of knowledge should follow the pattern of international migration. We test this idea using cross-country productivity spillovers leading to new exports as proxy for knowledge diffusion. We find that a 10% increase in immigration from exporters of a given product is associated with a 2% increase in the likelihood that the host country starts exporting that good ‘from scratch’ in the next decade. The results appear stronger for highly-skilled migrants, qualitatively similar for emigrants and robust to instrumenting for migration in a gravity framework.