Regional differences in the link between Euro-Mediterranean migration and bilateral trade

Literature suggests a positive correlation between international migration and bilateral trade between sending and receiving countries, primarily as a result of migrant network effects and preference for native goods. This is holds true for Middle Eastern and North African (MENA) migrants in the European Union (EU), though little is known about how the migrants may affect trade differently, depending on where they settle within Europe. Furthermore, there is a possibility that the migrant effect on trade varies depending on the host country's relative power to influence EU trade policy. This analysis investigates these questions using a fixed effects analysis with panel data for MENA migrants in Europe from 1998–2010. The use of fixed effects accounts for unobservable bilateral factors, and is a departure from the status quo of using cross-sectional data and OLS/Tobit specifications. The results suggest that homeland preferences slightly outweigh networking effects in understanding the elasticity of migration to trade in the EuroMed region, as well as provide preliminary evidence that the migration effect on trade is statistically significant for MENA imports from Europe's five largest countries. Finally, the results show that MENA migration to the United Kingdom, where migrant levels of education, skills, and assimilation differ (according to the literature), is negatively associated with British exports to MENA, though further research is warranted due to UK-specific data limitations.