Migrant networks and trade: The Vietnamese boat people as a natural experiment

By Christopher Parsons and Pierre-Louis Vézina in VOX

Immigrants potentially foster international trade by reducing trade costs. This column uses the exodus of the Vietnamese boat people to the US as a natural experiment to provide evidence of such a pro-trade effect. An exogenous allocation of Vietnamese migrants across the US in 1975 was followed by a 20-year trade embargo. Following the lifting of sanctions in 1994, the share of US exports going to Vietnam was higher and more diversified in the states with larger Vietnamese populations (…).

Results

Our results show that the share of US exports going to Vietnam over the period 1995-2010, i.e. following the lifting of the trade embargo in 1994, was higher and more diversified in those states with larger Vietnamese populations, themselves the result of larger refugee inflows two decades beforehand. We find that states with larger Vietnamese populations, measured in either levels or as shares of state populations, total migrant stocks or Asian migrant stocks, are associated with greater exports to Vietnam, whether expressed as shares of state GDP or total exports, or as the share of industries with positive exports, i.e. the extensive margin. Our results, which are robust to controlling for income per capita, remoteness from US customs ports, and export structure, suggest that a 10% increase in the Vietnamese network raises the ratio of exports to Vietnam over GDP by 2%, and the share of total exports going to Vietnam by 1.5%.

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