The thesis explores the question of whether immigrants can spur the internationalization and innovation activities of the local production systems of their countries of destination. It is composed of two parts. In the first part, migrants' pro-trade effects is analysed through a theory-consistent gravity model augmented with migration variables. The analysis takes subnational units, i.e. NUTS3 regions, and compares Italy and Spain. The empirical model allows for subnationally heterogeneous multilateral resistance term. An econometric strategy based on Head and Mayer (2014) is implemented to address the main econometric issues and to select the suitable estimator. This leads to selecting the Gamma PML estimator in the case of Spain and the OLS estimator in the Italian case. The results suggest that applying the same model to different contexts can lead to different results: immigration is found to have a positive trade facilitating effect in the Spanish case and a negative trade-diverting role in the Italian case. This difference is attributed to specificities in the composition and integration patterns of the immigrant population in the two countries; tentative explanations are proposed for the negative effect. The second part of the thesis analyses the determinants of immigrants’ employment focussing, in a comparative perspective, on two case studies of local systems specialized in the mechanic sector, i.e. Reggio Emilia in Italy and Elgoibar in Spain. The two are similar in many respects - income and employment levels, sectoral specialisation, high levels of local social capital - but are marked by quite different capacity of integrating immigrant labour in the core industry. Drawing on the availability of two sets of similar firm-level microdata at the corresponding NUTS2 levels, cluster and discriminant analysis are performed to outline the characteristics of firms hiring immigrants in each context. The comparison of the two regions shows that, in the more inclusive context, immigrants are also much more frequently employed in knowledge-oriented firms. The subjective determinants for hiring immigrants are deepened in a series of semi-structured interviews with the employers. In the local system marked by bridging social capital, immigrants’ employment is found to be determined by a wider set of considerations that span well beyond labour replacement in manual tasks. Diverse work teams are reported to contribute to product development and innovation allowing a combination of cost-saving standardization and cultural-specific customizability to serve foreign tastes