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How migrant networks can stimulate trade

Geoff Riley

18th July 2018

Following the 1994 lifting of US trade sanctions against Vietnam, the share of US exports going to its former enemy was higher and more diversified in states with larger populations of Vietnamese immigrants. That is the central finding of research by Christopher Parsons and Pierre-Louis Vézina, published in the Economic Journal.

Their study uses the exodus of the Vietnamese boat people to the United States in 1975 as a natural experiment to explore the impact of immigrant networks on international trade. Their baseline results suggest that a 10% increase in the Vietnamese network raised US state exports to Vietnam by between 4.5% and 14%.

Abundant anecdotal evidence also suggests that overseas Vietnamese play an active role in fostering trade between the United States and Vietnam. One particularly poignant example is that of David Tran, once a major in the South Vietnamese army, who fled the country in 1979 following the Sino-Vietnamese war.

After time in a United Nations refugee camp, Tran arrived in the United States in January 1980. After settling in Los Angeles, he established Huy Fong Foods, naming his company after the Taiwanese freighter on which he left Vietnam. Chief among Huy Fong Foods’ products is Sriracha sauce, a global brand that totalled sales of $60 million in 2012.

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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