Immigration and trade creation: econometric evidence from Canada

Immigrants may expand trade with their country of origin, owing to superior knowledge of, or preferential access to, market opportunities. We test this proposition using Canadian trade data with 136 partners from 1980 to 1992. In an augmented gravity equation we find that a 10 per cent increase in immigrants is associated with a 1 per cent increase in Canadian exports to the immigrant's home country and a 3 per cent increase in imports. We also find that among the primary categories of immigrants, independants have the greater influence on trade, Immigration via the entrepreneur class appears to have less impact on trade than all other classes except refugees.