Refocused immigration policy could boost trade

By AARON LIM – BusinessDay

Refocusing immigration policy to target migrants from developing countries could boost trade opportunities, according to the NZ Institute of Economic Research (NZIER).

In a research paper released this evening entitled Trade, Diaspora and Migration to New Zealand, the Institute found the current immigration policy focus on skills shortages overlooked the part that migrants play in linking New Zealand into international markets.

The research shows that if New Zealand receives 10 percent more migrants from a particular country, exports to that country grow by 0.6 percent and imports from it by 1.9 percent.

“The trade benefits are greatest when migrants come from developing countries where the English language is not dominant,” NZIER chief executive Jean-Pierre de Raad said.

“Their ability to speak languages other than English, navigate legal systems and draw on social and commercial networks in their origin countries are all valuable tools in stimulating trade.”

According to the paper, migrants from non-English cultures also have the greatest impact when it comes to stimulating tourism.

De Raad attributed this to a variety of factors, including the migrants transmitting a positive image of New Zealand to their home countries and because of country-specific knowledge of food, language and protocols.

“Immigration policies that see migration as a way of addressing skills shortages emphasise different things from policies which see migration as a way of facilitating international trade,” de Raad said.

“Given our relatively poor performance in terms of international linkages, perhaps a revision of the strategic objectives of immigration policy is warranted.”

NZIER said that because the Kiwi diaspora was concentrated in Australia, the United Kingdom, and the United States, the scope for further reducing transactions costs was low.

“We don’t believe the diaspora of New Zealanders overseas a very significant contribution to trade as migrants from non-English cultures,” de Raad said.

“One exception may be in wine exports which have grown strongly in recent years, particularly to the United Kingdom where there is a significant ex-pat population.”

In contrast, targeting immigrants from countries such as China and India, where transaction costs are high could have a positive effect on trade.

The Institute said that the effect of migration was strongest for differentiated goods, and for trade with developing countries where transaction costs are highest.  

The research also found that the impact of migration on tourism was several times stronger than the effect of migration on merchandise trade.

The research paper was prepared by David Law, Murat Genc and John Bryant under funding from the Institute’s 50th Anniversary Research Award.

The authors of the paper examined data from more than 190 countries from 1981 to 2006. Sources included Statistics New Zealand, the United Nations Statistics Division’s Comtrade Database, the Global Migrant Database, the World Trade Organisation, and the Research Center in International Economics.