The paper, Trade, Diaspora and Migration to New Zealand, says immigration boosts both merchandise trade and tourism but current immigration policy that focuses on skills shortages overlooks the part that migrants play in linking New Zealand into international markets.

David Law, Murat Genc and John Bryant authored the paper with funding from the Institute’s 50th Anniversary Research Award.

Using a model that adjusts for influences such as distance and the size of economies migrants come from, the authors found that immigration does have a positive impact on trade. 

On average, if New Zealand receives 10 percent more migrants from a particular country, exports to that country grow by 0.6 percent and imports from it by 1.9 percent.

“The trade benefits are greatest when migrants come from developing countries where English language is not dominant,” NZIER chief executive Jean-Pierre de Raad said.  “Their ability to speak languages other than English, navigate legal systems and draw on social and commercial networks in their origin countries are all valuable tools in stimulating trade.”

Migrants from non-English cultures also have the greatest impact when it comes to stimulating tourism. “This may be because they transmit a positive image of New Zealand to their home countries and because country-specific knowledge of food, language and protocols is particularly important in tourism.

“To capture the benefits, we could think about targeting these migrants more. The current emphasis is on skilled migrants with good English. They are attractive because they assimilate easily, but they may not have the same links into fast-growing economies.

“Immigration policies that see migration as a way of addressing skills shortages emphasise different things from policies which see migration as a way of facilitating international trade. Given our relatively poor performance in terms of international linkages, perhaps a revision of the strategic objectives of immigration policy is warranted.” 

While there are more than half-a-million New Zealanders living overseas, their impact on trade and investment is difficult to measure, but is likely to be more muted.

“In common with migrants from destinations such as the UK, we don't believe the diaspora of New Zealanders overseas make such a significant contribution to trade as migrants from non-English cultures.
 
“One exception may be in wine exports which have grown strongly in recent years, particularly to the United Kingdom where there is a significant ex-pat population,” Jean Pierre de Raad said.

The paper's authors examined data from more than 190 countries from 1981 to 2006. Sources included Statistics New Zealand, the United Nations Statistics Division's Comtrade Database, the Global Migrant Database, the World Trade Organisation, and the Research Centre in International Economics.