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Entrepreneurial Migration in an Integrated World
Author(s) -
Bougheas Spiros,
Falvey Rod
Publication year - 2018
Publication title -
the scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/sjoe.12249
Subject(s) - economics , production (economics) , foreign direct investment , investment (military) , quality (philosophy) , capital (architecture) , international economics , international trade , labour economics , monetary economics , macroeconomics , history , philosophy , archaeology , epistemology , politics , political science , law
A growing number of developed countries offer entrepreneurial visas as a means of attracting entrepreneurial talent and capital. In this paper, we use a simple two‐sector model of international trade with heterogeneous agents and financial frictions to show that entrepreneurial migration can contribute to the international efficiency of production, even when capital also flows internationally through borrowing and lending and foreign direct investment. In our model, all cross‐border transactions are motivated by cross‐country variations in the quality of financial institutions.