Diaspora Disconnect

A study finds that migration and trade links are weaker than assumed, with Indian and Chinese migrants showing limited, context-specific economic impact

- • Parth Singh

For decades, economists have believed that migrants serve as natural trade ambassadors, carrying with them knowledge of home markets and preference for home country goods.

It is an elegant idea that a family from India, moving to New Jersey, sparks new demand for Indian spices, or a Chinese engineer in Frankfurt links up a German firm with a Shenzhen supplier.

But what if this pro-trade story is not the rule, but the exception?

That is the provocation in “International Migration and Trade: A Comparative Analysis of China and India” (Journal of Asian Economics, 2025) by VC Sabeer, a research associate at Indian Institute of Foreign Trade, Delhi. Using a much stricter empirical lens than earlier research, Sabeer finds that neither Indian nor Chinese emigrants systematically boost trade at the aggregate level. In fact, the evidence hints that in some cases, migra- tion may substitute for trade rather than promote it.

Fixing Old Models

Earlier studies often used trade models that had blind spots. They struggled to account for cases where no trade happened between two countries and ignored the fact that trade is also shaped by what happens with other countries.

Moreover, both trade and migration flows may be influenced by bilateral historical relationships, such as colonial ties or longstanding cultural connections, which earlier studies failed to control for adequately. Because of these gaps, many studies may have overstated the extent to which migrants boost trade.