Migration, Knowledge Diffusion and the Comparative Advantage of Nations

Why do some countries become competitive exporters of certain products while others never develop those capabilities? Traditional trade theory emphasizes factors like natural resources or capital accumulation, but this paper demonstrates that migration plays a crucial and underappreciated role in shaping countries' comparative advantages.

We examine detailed data on bilateral migration stocks and export patterns for over 100 countries. The key finding is remarkable: countries are significantly more likely to develop export competitiveness in products where their immigrant populations have productive experience. When a country receives migrants from places that already export a particular product, that country becomes more likely to start exporting the same product itself.

This evidence suggests that migrants carry tacit productive knowledge—the kind of 'know-how' that cannot easily be transferred through manuals or formal education. Our findings have profound implications for understanding economic development and the benefits of immigration: migrants don't just fill jobs, they transfer knowledge that can reshape entire industries and help countries climb the development ladder.