Diaspora Externalities and Technology Diffusion

The aim of this paper is to highlight the positive and important role that skilled migration can have on TFP growth in the sendind countries, when diaspora effects in technology diffusion are introduced. To investigate our issue, we start from a previous paper by Vandenbussche, Aghion and Costa Methir (2006), in which they examine the contribution of human capital to economic growth, where technological improvements are a result of a combination between innovation and imitation. Considering the impact of a positive externality on growth due to skilled migration, we show that a marginal increase in the stock of skilled human capital contributes more to productivity growth if a state is closer to the technological frontier and migration should raise growth in area from the frontier. Also, we provide evidence in favour of this prediction by using a panel dataset covering 92 countries between 1980 and 2000. Even if our empirical study has a lot of shortcomings, given the small number of countries and of time periods due to the current availability of data in the existing cross-country datasets, this works is the first one that attempt to investigate the relationship between growth and networks externalities, underlying the importance of the skilled diaspora in the transfer of ideas.