Immigrant Diversity, Institutional Quality, and GVC Position

Abstract

This paper investigates the effect of immigrant diversity on a country’s position in global value chains (GVCs) and how this effect depends on the institutional quality of destination countries. We investigate this issue using data on 19 manufacturing sectors of 18 OECD countries over the 2000–2014 period. Fixed effects estimation results show that the impact of immigrant diversity on the GVC position is significantly influenced by the institutional quality of destination countries. Specifically, in countries with high (low) institutional quality, immigrant diversity is positively (negatively) associated with the GVC position. Moreover, the interaction effect of immigrant diversity and institutional quality on the GVC position is heterogeneous across immigrant groups and institutional dimensions. This study not only enriches the literature on the relationship between immigrant diversity and GVC position but also discusses new ideas that can promote GVC positions of real economics, which is essential for sustainable economic development.