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Migration and Trade Go Hand in Hand for Africa and the US

Sonia Plaza's picture

A recently introduced bipartisan legislation entitled, “The Increasing American Jobs through Greater Exports to Africa Act of 2012 “ will promote the increase of US exports to Africa. On March 22, U.S. Rep. Bobby L. Rush (D-IL) jointly with U.S. Rep. Chris Smith (R-NJ) presented a bill to improve the competitiveness of U.S. business in Africa, including African diaspora businesses. The bill also proposes to explore ways to utilize diaspora remittances to Africa for development purposes.

This is a welcome initiative. The contribution of the diaspora goes beyond remittances and includes promotion of trade, investments, knowledge, and technology transfers. Diasporas facilitate bilateral trade and investment flows between their country of residence and their home country. Countries appear to trade more with countries from (to) which they have received (sent) migrants.  Empirical models are finding that trade and migration are complements and not substitutes.  However, not only African governments are reaching to their diasporas but destination countries are also devising initiatives to helping African diasporas promote the development of their countries of origin.

The figure below indicates a positive relationship between the size of migrant populations living in OECD countries and the level of bilateral merchandise between OECD countries and all African trading partners for which data are available. Encouraging African diaspora businesses to export US products to their countries seems beneficial for all the parties.

More details on this topic can be found in a recent book “Diaspora for Development in Africa."

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