Does Birthplace Diversity Affect Economic Complexity? Cross-Country Evidence

40 Pages Posted: 30 Mar 2020 Last revised: 16 May 2023

See all articles by Dany Bahar

Dany Bahar

Brown University - Watson Institute for International and Public Affairs; Harvard University - Center for International Development (CID)

Hillel Rapoport

Paris School of Economics (PSE)

Riccardo Turati

Universitat Autonoma de Barcelona

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Abstract

We empirically investigate the relationship between a country's economic complexity and the diversity in the birthplaces of its immigrants. Our cross-country analysis suggests that countries with higher birthplace diversity by one standard deviation are more economically complex by 0.1 to 0.18 standard deviations above the mean. This holds particularly for diversity among highly educated migrants and for countries at intermediate levels of economic complexity. We address endogeneity concerns by instrumenting diversity through predicted stocks from a pseudo-gravity model as well as from a standard shift-share approach. Finally, we provide evidence suggesting that birthplace diversity boosts economic complexity by increasing the diversification of the host country's export basket.

Keywords: economic complexity, birthplace diversity, immigration, growth

JEL Classification: F22, O31, O33

Suggested Citation

Bahar, Dany and Rapoport, Hillel and Turati, Riccardo, Does Birthplace Diversity Affect Economic Complexity? Cross-Country Evidence. IZA Discussion Paper No. 13078, Available at SSRN: https://ssrn.com/abstract=3562868 or http://dx.doi.org/10.2139/ssrn.3562868

Dany Bahar (Contact Author)

Brown University - Watson Institute for International and Public Affairs ( email )

111 Thayer Street
Box 1970
Providence, RI 02912-1970
United States

Harvard University - Center for International Development (CID)

One Eliot Street Building
79 JFK Street
Cambridge, MA 02138
United States

Hillel Rapoport

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Riccardo Turati

Universitat Autonoma de Barcelona ( email )

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