Migration is an important and yet neglected determinant of institutions.The paper documents the channels through which emigration a¤ects home country institutions and considers dynamic-panel regressions for a large sample of developing countries. We …nd that emigration and human capital both increase democracy and economic freedom. This implies that unskilled (skilled) emigration has a positive (ambiguous) impact on institutional quality. Simulations show an impact of skilled emigration that is generally positive, signi…cant for a few countries in the short run and for many countries in the long run once incentive e¤ects of emigration on human capital formation are accounted for.JEL codes: O1, F22.

The role of migrants' networks in promoting cross border investments has been stressed in the literature, possibly making migration and FDI complements rather than substitutes in the long run. In this paper, we estimate the magnitude of such business network externalities in dynamic empirical models of FDI-funded capital accumulation. We use original data on capital and migration stocks rather than ‡ows. Regarding migrants, we distinguish the total and the skilled diasporas abroad. In both cross-sectional and panel frameworks, we …nd evidence of strong network externalities, mainly associated to the skilled diaspora. These network externalities are stronger for countries exhibiting intermediate corruption index.