Heterogeneous Immigrants, Exports and Foreign Direct Investment: The Role of Language Skills

Aufsätze referiert extern - Web of Science

Matthias Lücke, Tobias Stöhr

In: The World Economy 41 (2018), 6, S. 1529-1548


We investigate the interplay of language skills and immigrant stocks in determining bilateral FDI outstocks of OECD reporting countries. Applying a Poisson panel estimator to 2004–11 data, we find robust evidence for a positive effect of bilateral immigrants on bilateral FDI-provided that residents of the two countries have few language skills in common. We find a similar effect for immigrants from third countries that speak the language(s) of the FDI host country, making them potential substitutes for bilateral migrants. Our findings suggest that immigrants facilitate outgoing FDI through their language skills, rather than through other characteristics like cultural familiarity.

Tobias Heidland

Research Associate in the International Economics Department