Standard neoclassical models of economic integration assume that capital and labor are substitutes and that the origin of these factors doesn’t matter. However, these assumptions don’t hold if there are agglomeration forces, where factors from specific countries cluster together and behave as complements. This paper empirically examines the agglomeration of capital and labor. Using state-level data from Germany, we explore the relationship between migration and foreign direct investment (FDI). We find that both inward FDI and immigrant populations are influenced by similar factors, and the origin of these factors matters. Specifically, German states with large foreign populations from the same country tend to have higher stocks of inward FDI, particularly from higher-income countries.