Does Migration Foster Trade? A Natural Experiment on the Iranian Diaspora

Sammanfattning: The main objective of this paper is to assess the impact of migration on exports as well as imports, and more specifically, the effect of the Iranian diaspora on trade between their home and host countries. The lifting of the economic sanctions, which was followed after the “Joint Comprehensive Plan of Action”, on Iran throughout 2016 and 2017 is used as a natural experiment to analyse if there is a significant effect on trade of an Iranian diaspora throughout the years when the sanctions were lifted. The overall effect of the Iranian diaspora on trade is conducted with data spanning from 2010 to 2017. The paper employs a gravity model with standard variables, as well as with additional migration stock variables and country stability controls. The method of choice is the Poisson Pseudo-Maximum Likelihood (PPML) estimator. The effect on all goods, as well as on various products, is examined and the results regarding exports to Iran indicates that there is a positive correlation between the Iranian diaspora and exports during the whole time frame; however, there is no evidence of any causal effect. The outcome of the Iranian diaspora during the two years without sanctions is insignificant. The effects on imports from Iran are ambiguous, and it is not easy to establish a general conclusion.