OFDI in the Presence of Migration

This paper analyses the effect that migration have in the promotion of outward foreign direct investment (OFDI). We argue that migrants are going to decrease the transaction costs inherent to bilateral movement of capitals between countries promoting a positive effect on the issuance of direct investment abroad. We used a traditional gravity model and a tobit estimation method. Results suggest a positive influence of migrants on OFDI when migration goes from the European Union and North America to Latin American countries. When migrants go from Latin America to the European Union and North America we are not getting significant results on the OFDI. The positive impact of the migration on OFDI could be in function of the economic development of the migrants’ home countries, in combination with the direction of the migration (immigrants and emigrants).