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International Migration and Trade Liberalization

Author

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  • Junichi Goto

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

The world is increasingly interconnected with each other in terms of goods, money, and labor (international migration). In view of the importance of international migration in recent years, the purpose of this paper is to analyze, somewhat rigorously, the economic impact of migration on sending countries as well as receiving countries, taking East Asia after the Asian Financial Crisis as an example. After examining the data on migration in East Asia before and after the Asian Financial Crisis, I develop a simple 2x2x2 CGE model, which incorporates migration, foreign investment, and international trade, to empirically analyze the impact of migration in a wider perspective (i.e., migration, trade, and FDI are simultaneously analyzed). The model is applied to the relationship between Japan and seven countries/area in East Asia (China, Indonesia, Korea, Malaysia, the Philippines, Thailand and Taiwan). Through a series of simulation exercises, I found that migration tends to give negative welfare effects to receiving countries, although it has positive welfare impact on sending countries. The simulation exercises also suggest that migration is inferior to trade liberalization as a means of bringing positive welfare effects, such as income creation and reduction of unemployment, to sending countries, because migration is the movement of human being as a whole and therefore it inherently involves higher adjustment cost than international trade which is a mere movement of goods across the border. Strategy of international business of Japanese manufacturing companies has drastically changed for the last half century. Export long occupied central position in the international business strategy. In 1985 the Plaza Accord was reached and sharp appreciation of Japanese yen started. And strategic shift from export to foreign production began in 1986. Recently many companies have overseas R&D sites. However, when we turn our attention to management of international business, we observe only subtle change. Foreign subsidiaries are managed by Japanese expatriates. The Japanese language plays important role in the communication on important matters. Global operations are managed by Japanese persons and in the Japanese language. The non-manufacturing multinationals share the same characteristics as the manufacturing multinationals. The Japanese style international management is well suited to respond to Japanese customers and to transfer technology from Japanese parent companies to their overseas subsidiaries. However, it has problems. It is costly and depresses initiatives of local capable staff. Then, should Japanese multinationals change their international management in the future ? The Japanese style international management is based on Japanese management at parent companies in Japan. It is also based on cultural factors such as the Japanese language, Japanese persons' attitude toward foreigners and interpersonal relationship. Thus, to change the management of international business is more difficult than to change the strategy of international business.

Suggested Citation

  • Junichi Goto, 2000. "International Migration and Trade Liberalization," Discussion Paper Series 109, Research Institute for Economics & Business Administration, Kobe University.
  • Handle: RePEc:kob:dpaper:109
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    References listed on IDEAS

    as
    1. Fershtman, Chaim & Nitzan, Shmuel, 1991. "Dynamic voluntary provision of public goods," European Economic Review, Elsevier, vol. 35(5), pages 1057-1067, July.
    2. Cornes, Richard & Sandler, Todd, 1985. "On the consistency of conjectures with public goods," Journal of Public Economics, Elsevier, pages 125-129.
    3. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, pages 25-49.
    4. Scafuri, Allen J., 1988. "On consistency of conjectures in the private provision of public goods," Journal of Public Economics, Elsevier, pages 395-398.
    5. Shimomura, Koji, 1991. "The feedback equilibria of a differential game of capitalism," Journal of Economic Dynamics and Control, Elsevier, vol. 15(2), pages 317-338, April.
    6. Itaya, Jun-ichi & Dasgupta, Dipankar, 1995. "Dynamics, Consistent Conjectures, and Heterogeneous Agents in the Private Provision of Public Goods," Public Finance = Finances publiques, , vol. 50(3), pages 371-389.
    7. Costrell, Robert M., 1991. "Immiserizing growth with semi-public goods under consistent conjectures," Journal of Public Economics, Elsevier, pages 383-389.
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    More about this item

    Keywords

    International affairs; Migration; Trade;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F10 - International Economics - - Trade - - - General
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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