Take Me Home, Country Roads: Historical Diasporas and Contemporary FDI Patterns

We examine whether historical diasporas shape current foreign direct investment (FDI) flows, using Italian data from the ‘age of mass migration’ (1876–1925). We find that Italian regions with larger diasporas at the turn of the twentieth century maintain persistent economic ties with their historical destinations. Specifically, our gravity estimates show that greater historical diasporas are associated with larger inward and outward FDI flows between 2003 and 2015, with effect sizes that largely outweigh those of current migration. The stronger effects for taste‐sensitive functions and the complementarity with current migration point to culture and taste convergence as key mechanisms.