This paper investigates the influence of immigrants on Danish imports and exports. As public and political debates concerning immigration policy are expected to continue, the findings presented here provide valuable information. Prior to 2002, Denmark's immigration policy was among the most liberal in Europe. However, concerns regarding terrorism, social services depletion, and detrimental labour market effects, all purported to stem from immigration, led the Danish government to severely tighten its policy. In examining Denmark, we explore the immigrant‐trade relationship in a small host country that is globally well‐integrated, open to trade, and proximate to both major trading partners and primary immigrant source nations. Further, as the share of the Danish population constituted by immigrants increased from 2.6 to 5.6 per cent between 1980 and 2000, Denmark presents an opportunity to consider immigrant‐trade links for an increasingly diverse population that was initially relatively homogenous.

We consider a number of variations regarding home countries and trade values to estimate immigrant‐trade links using a Tobit specification. The findings presented here, when considered in relation to prior research, suggest that the presence and magnitude of immigrant‐trade links vary according to host country population homogeneity.