The impact of immigrant business ownership on international trade
Understanding the impact of immigrants on international trade is particularly important for Canada, as it is a small open economy with a relatively large immigrant population. This paper empirically investigates the effect of immigrant business ownership on international trade in Canada using a newly developed firm-level database with detailed business ownership and trade information. The new data make it possible to better distinguish between the effect immigrants have on reducing information costs and on product demand, and to assess the impact of immigrant business ownership on the extensive and intensive margins of international trade. The results show that although the effect of immigrant business ownership on international trade with all partner regions is either insignificant or small on average, immigrant-owned firms have a positive and significant effect on Canada’s trade with the regions of origin of immigrant owners. Compared with Canadian-owned firms, immigrant-owned firms in the manufacturing sector have, on average, a higher probability of importing from (by 6.7 percentage points) and exporting to (by 2.1 percentage points) the immigrant owners’ regions of origin, ceteris paribus. Also, conditional on being importers or exporters, immigrant-owned firms have stronger trade connections with the regions of origin of immigrant owners–as measured by a larger number of products and average value per product imported or exported–than their Canadian-owned counterparts. The impact of immigrant business ownership is even larger in the wholesale trade sector, highlighting the role of immigrants as trade intermediaries. Immigrant owners admitted through the business, skilled labour or provincial nominee classes, and owners with a higher level of education upon arrival, are more likely to have a greater impact on international trade than other immigrant owners.