Cultural diversity, immigration and trade: A study of nine OECD host countries

Employing data from nine OECD countries and 67 trading partners for the years 1996-2001, we examine the inter-relationships between immigration, cultural diversity and trade. We find greater cultural differences between immigrants' host and home countries inhibit trade flows. However, immigrants exert pro-trade influences that partially offset the effect of cultural distance. We also find that greater cultural diversity within the immigrants' host countries is associated with the creation of trade between immigrants' host and home countries. The findings suggest that the ability of immigrants to influence their host's trade with their home countries depends, in part, on the characteristics of the host country relative to the home country.