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Beyond BLS

January 2016

International migration patterns amid globalization

Scott Berridge

According to international economist Mark A. Wynne, migration is one of the “four dimensions” of globalization; he considers the others to be cross-border flows of goods, cross-border flows of capital, and the flow of ideas, such as technologies and best practices. Exploring the possibility that increased migration can benefit both the host and home countries, Wynne looks at the gains produced by international migration in International migration remains the last frontier of globalization (Federal Reserve Bank of Dallas, Economic Letter, March 2015).

Despite more legal restrictions to cross-border movement of people today than in the past, current migration flows are reminiscent of those of the great migrations of the late 19th and early 20th centuries. Migration was curtailed with the start of World War I and didn’t revive to its previous rate of around 600 per million world inhabitants until the 1990s. Despite today’s obstacles to migration such as work permits, passports, and visas, rates of international migration are historically quite high.

Regardless of the varying number of barriers to migration, immigration has always had both personal and financial costs. The financial costs in the 19th century were too high for most potential immigrants from Europe to the Americas. Relative costs have declined over many decades because of advances in transportation and because of financial help in the form of remittances to new immigrants from previous “pioneers.” Lowered costs helped establish heavy corridors of traffic from poorer countries to richer ones, such as that between Mexico and the United States or between Turkey and Germany. Nowadays, the country with the largest number of migrants is the United States—which had 42.8 million foreign-born residents in 2010, according to the World Bank—followed by Russia, Germany, France, and the United Kingdom.

In addition, other corridors have opened between less developed nations, such as between Bangladesh and India or between India and the United Arab Emirates. In 2010, there were 85 million people from less developed nations living in countries with advanced economies, while there were 91 million people who migrated into countries with developing economies.

The author posits that barriers to both international capital mobility and the integration of global trading systems today are minimal by historical standards, so any further elimination of remaining barriers would lead to only a very modest increase in global gross domestic product (GDP). Yet by eliminating all barriers to international migration, global GDP could increase by 67 to 147 percent.

What would be the economic benefits to both host and home countries? Host countries with large immigrant populations would benefit by having a broader consumer base. (Small countries, such as Qatar, Andorra, and Kuwait, have the highest percentages of foreign-born population.) Although home countries might be expected to suffer from a loss in population, they would be compensated by remittances sent from expatriates. These remittances can be as high as 5 percent of the home country’s GDP. 

Wynne argues that people would be better off globally with increased migration and fewer barriers to movement. The benefits, however, are dependent on the interaction of the migrants with their host countries and the supply of public goods and services such as education and unemployment insurance. The movement of people in the future is likely to be less than that of goods, capital, and ideas, but even the current levels of migration provide significant welfare to both host and home countries; more migration would be even better.

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