Migration, exports and capital: what is the impact of ghettos on local firms?

ABSTRACT

This paper investigates the effects of migration on the export and production techniques of agri-industrial firms in the proximity of clusters of migrants. The analysis draws on an original dataset built through interviews conducted with agri-food firms in the Foggia province (southern Italy). Over the past two decades, this area has experienced a strong influx of migrants, who have concentrated in ghettos. The results do not support a pro-trade effect, but provide evidence for both a substitution and a complementarity effect of migrants on capital endowment, depending on the type of machinery used by the firm.

KEYWORDS:

• Migration
• ghettos
• physical capital
• exports
• agri-food firms

JEL CODE:

• F22
• J4
• D24
• F16
• Q13

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ Melitz’s (2003) seminal contribution inaugurated a new strand of literature on firm heterogeneity and international trade.

² Grossman and Rossi-Hansberg (2008) proposed the task model to explain the effects of offshoring on productivity and wages..

³ Generally, this literature focuses on the impact of the presence of migrants on the host country’s imports and exports, vis-a-vis the country of origin, finding that the impact is positive (on both imports and exports). See, inter alia, Coughlin and Wall (2011), Felbermayr, Jung, and Toubal (2010), Peri and Requena-Silvente (2010), Rauch (1999, 2001), and Rauch and Trindade (2002).

⁴ HIIT consists of the exchange of products within the same sector that are differentiated only by product attributes, not by quality. VIIT, on the other hand, consists in the exchange of goods differentiated by quality. Models of intra-industry trade have shown that the explanatory factors underlying the two components are different. Krugman-style models – in which love of variety and economies of scale play a key role – explain HIIT (see, e.g. Krugman, 1979); whereas factor intensity and income distribution are the key factors explaining VIIT (see, e.g. Falvey and Kierzkowski 1987). For a review of this literature and an empirical case of the UK, see Celi (2010) and Greenaway et al. (1995).

⁵ Apricena, Carapelle, Chieuti, Foggia, Lesina, Lucera, Manfredonia, Orta Nova, Poggio Imperiale, Rignano Garganico, San Giovanni Rotondo, San Marco in Lamis, Sannicandro Garganico, San Paolo di Civitate, San Severo, Serracapriola, Stornara, Stornarella and Torremaggiore.

⁶ More specifically, the population was stratified according to subsectors, municipalities, and legal forms.

⁷ Moreover, our survey does not distinguish between foreign workers with fixed-term contracts from those with permanent contracts. Considering only fixed-term workers – generally exceeding permanent workers in the case of immigrants – the percentage of foreigners should be over 24%, a figure even higher than that reported for Apulia.

⁸ Estimation results at different quantiles are available on request.