Immigration’s Impact on Bi-lateral Trade Formation: A Social Network Analysis Approach

Abstract

In recent years, the proliferation of free trade agreements (FTA) has led to rapid economic boons and political security among nations. This study investigates whether the percentage of expats or permanent foreign residents plays a role in deciding which countries to partner with in bi-lateral FTAs. Previously, the reasons for FTA formation were believed to be primarily based upon economic, geographic, and political reasons. However, through the use of social network analysis, a larger picture can be mapped which allows for a more comprehensive understanding of key players in the current state of FTA formation in relation to the immigrant network that they share between them. More specifically, through computerized social network analysis, centrality can be calculated to determine the key players and the most central immigrant populations. When analyzing both the immigrant centrality in relation to FTA centrality, it becomes evident that there is a high correlation between the two factors. Thus, the findings highlight that immigration trends can be used as a predictor of FTA formation. As a result, it emphasizes the weight of immigration policy on the formation of bi-lateral FTAs.