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International migration and the global economic order : an interview

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  • Solimano, Andres
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    Global capitalism, vintage early 21st century, favors the movement of goods and capital across national borders more than it does the movement of people. It was not always this way. The first wave of globalization, in the second half of the 19th century and the early 20th, came with massive international migration. Around 60 million people migrated from Europe to the countries of the New World (Argentina, Australia, Brazil, Canada, and the United States) over a period of 40 years or so. In a sense, current globalization has a smaller degree of"cosmopolitan liberalism"in thedimension of international migration. While there is consensus on the benefits of an open trade regime and relatively liberal capital movements, that consensus rarely extends to the free movement of people. Solimano examines this difference in the"freedom to become global"by looking at both standard trade theory, basically the Mundell theorem of trade and migration as substitutes, and the ensuing analytical developments and empirical evidence around the Mundell result. He then looks at this asymmetry in today's global economic order from the perspective of freedom, individual rights, and transnational citizenship, as well as the potential of international migration to reduce global inequality. Preventing factor (labor or human capital) movements from lower- to higher-productivity activities (countries) may entail a global welfare loss in terms of forgone world output (although the distributive consequences for sending and receiving countries vary). International migration tends to reduce income disparities across countries. But it can increase inequality within labor-scarce receiving countries by moderating the growth of wages, because of the associated increase in the supply of labor. In contrast, in sending countries emigration can have an equalizing effect by reducing the supply of labor and raising wages. Still, international migration is bound to have a positive effect on long-run growth in receiving countries by keeping labor costs down, increasing the profitability of investment, and raising national savings. For sending countries, the impact on growth depends on the pool of labor and human resources that emigrate. In labor-abundant developing countries with chronic unemployment (or labor surplus), the growth-depressing effects of emigration can be small (compensated in part by labor remittances). Nevertheless, the emigration of highly educated people, professionals, and national investors can have a detrimental effect on long-run income levels and growth rates for sending countries. Froma global perspective, however, world output would be expected to increase if people could freely move across the planet from areas of low labor productivity to areas of high labor productivity. From the viewpoint of global economic freedoms, the result would be equally positive.

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    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2720.

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    Date of creation: 30 Nov 2001
    Handle: RePEc:wbk:wbrwps:2720
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    1. Gandal, Neil & Hanson, Gordon H. & Slaughter, M.J.Matthew J., 2004. "Technology, trade, and adjustment to immigration in Israel," European Economic Review, Elsevier, vol. 48(2), pages 403-428, April.
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    4. Gordon H. Hanson & Raymond Robertson & Antonio Spilimbergo, 2002. "Does Border Enforcement Protect U.S. Workers From Illegal Immigration?," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 73-92, February.
    5. J. Bradford DeLong, 2000. "The Shape of Twentieth Century Economic History," NBER Working Papers 7569, National Bureau of Economic Research, Inc.
    6. Borjas, G.J., 1999. "Economic Research on the Determinants of Immigration. Lesons for the European Union," Papers 438, World Bank - Technical Papers.
    7. Kevin H. O'Rourke & Jeffrey G. Williamson, 2001. "Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650592, January.
    8. William Carrington & Enrica Detragiache, 1998. "How Big is the Brain Drain?," IMF Working Papers 98/102, International Monetary Fund.
    9. Guillermina Jasso & Mark R. Rosenzweig & James P. Smith, 2000. "The Changing Skill of New Immigrants to the United States: Recent Trends and Their Determinants," NBER Chapters,in: Issues in the Economics of Immigration, pages 185-226 National Bureau of Economic Research, Inc.
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