Summary :

In this report, firstly, the institutional framework that governs and facilitates the factor (labor force) movement and trade of goods between the EU and Mediterranean countries are assessed.  Secondly, empirical analyses are carried out to analyze the impact of migration on bilateral trade between the EU and Mediterranean countries and on product diversity in the EU. Immigrants are grouped with respect to their origin as Mediterranean and Eastern European countries. Trade analyses cover both industry-level bilateral exports and imports and product diversity is measured by focusing both on industry-level employment and number of enterprises.The empirical evidence tells that migration and international trade are complementary to each other rather than substitutes. Almost in all cases a positive correlation between migration and both exports and imports is found. This outcome also supports and accepts the ?information bridge hypothesis? which boosts trade via lowering transaction costs. The empirical evidence found on the relationship between migration and product diversity in some industries is not as strong as the one between international trade and migration. Therefore, the evidence  on existence of ?transplanted home bias? that boosts imports from the origin countries and motivates production in some industries in host countries, is very vague.From the above perspective, the development of Euro-Mediterranean relationships initiated in Barcelona in 1995 has already generated a number of positive results to be consolidated for future policies. Along with immigration issue, regional integration and the integration of Mediterranean countries towards the EU to reap the potential benefits of globalization and free trade is still an important issue to tackle.