Discussion Papers, Center for European Governance and Economic Development Research 198
This paper provides evidence of the effect of immigration-based networks on German trade. Germany presents a particular interesting case study to examine the effect of ethnic networks on exports due to its high export dependence and its reserved migration policy. According to our results, we find no trade creating effect from migrant networks on exports but on imports, highlighting the importance of the demand effect for Germany. Allowing for heterogeneous network effects shows that at least some migrant networks positively affect exports. However, the most efficient migrant networks do not originate from EU countries but from African or middle-eastern countries that do not have a large migrant network in Germany.