India, China top migrant exporters

Mumbai, Nov 22 | Updated: Nov 23 2005, 06:12am hrs
India and China are among the top senders of migrants in the case of Mode 4, which refers to cross-border delivery of services through the temporary movement of persons.

Statistics show that the large number of Indian H-1B visa holders work in the information technology sector in the US. In 2000 and 2001, the number of H-1B beneficiaries of Indian origin was higher than the large number of new Indian immigrants accepted to the US.

This was revealed in a paper titled "The impact of Mode 4 Liberalisation on Bilateral trade flows" released by the World Trade Organisation (WTO) on Tuesday. The paper has been released ahead of the WTO ministerial meeting slated for December.

According to the WTO paper, "India is by far the most important sending country of H-1B beneficiaries, followed by China. The ranking of sending countries at the top end was rather stable in the period 2000-02 with only Russia falling out of that group in 2002 to be replaced by Colombia. H-1B beneficiaries from India were 1,24,647 against the immigrant stocks of 10,22,552 followed by 22,570 (against 9,88,857) and Canada which stood at three with 8,365 beneficiaries (8,20,771)."

Empirical research on the links between migration and trade provides substantial evidence of a link between immigration and both import and export volumes.

Estimates of the impact of a 10% increase in migrant population on merchandise exports range from 0.1% to 2.5%, while the effect on import ranges from 0.1% to 3.1%.

Trade flows increase because the presence of migrants reduces transaction costs for trade with the relevant home country. Besides, migrants may have a preference for goods from their home country which explains why imports from that country increase.

"The trade effects of migration increase with the skill level of migrants and that the trade promoting effects are greatest for newer cohorts of migrants. This indicates that it may not be necessary for migration to be permanent in order to have significantly positive effects on bilateral trade flows," the WTO paper opined.

The inflow to the US of temporary workers that provide a service is negatively related to the GDP per capita of their country of origin, its distance from the US, whether it is a landlocked country and the age dependency ratio, while it is positively related to whether the official language is English.