IMPACT OF IMMIGRATION ON INTRA-INDUSTRY TRADE: AN EMPIRICAL EVIDENCE FOR OECD COUNTRIES

Globalization has become one of the very important factors due to which countries are getting integrated with each other. Social and ethnic network have reduced transaction cost very drastically. Moreover, migration has contributed to the increase in the international trade. Also, theory has proved that migration has more impact on intra-industry trade (export and import from the same industry) than inter industry trade (export and import from different industry) so it becomes very important to study the relationship between the two variables. In this study we have tried to find out the relationship between immigration and Intra-Industry trade for 25 OECD countries. Data has been collected from the year 1999-2017 based on the availability of the data. Balanced panel data model has been used in the study to establish the relationship between Intra-Industry trade and Immigration. The study found that there exists no significant relationship between immigration and Intra-Industry trade and thereby it contradicts the other studies. However, the study supports the theory that immigration helps trade by reducing the trade transaction cost. Moreover, the study found that there exists negative relationship between capital labour ratio and Intra-Industry trade.