Economic Migration: A Threat of a Benefit to Developed Countries - Essay Example

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ECONOMIC MIGRATION: A THREAT OR A BENEFIT TO DEVELOPED COUNTRIES ………….. …………….. ……… TABLE OF CONTENTS Introduction………………………………………… 3 Key trends and characteristics………........................ 3 Worldwide immigrants statistics………………….. 4 Effects of migration……………………………….... 5 Benefits of migration………………………… 5 Manpower supply……………………… 5 Resources utilization………………………. 6 Cultural relation and community cohesion….. 7 Low wage keeps inflation low……………. 7 Dynamism in economic activities ……… 8 Business relation …………………………… 8 Treats of migration………………………………… 9 Low wages keep other workers wages low….. 9 Increase in criminal acts:……………………… 9 Use of government subsidized services without paying taxes…………………………………… 9 Sending money to home country:…………… 9 Increased cost on society in terms of larger population …………………………………… 10 Conclusion……………………………………………… 10 References………………………………………………… 11 Introduction Economic migration and its impact on the economy has scarcely been out of public debates over the past few months, with many controversies to the extent of social and economic gain to the developed, developing and under developed countries from immigration. However, economic migration has presented greater opportunities for the same countries, particularly in economic term (Marangozov, 2007). Today’s economic world is witnessing economic or labor migration rapidly mainly due to the increased demand for low-wage workers in developed countries and lack of employment opportunities in developing countries. Both men and women are pursuing to work in other countries in order to support themselves and their families back home. This piece of research presents a brief report on economic migration and its impact on developed countries. This paper analyzes various benefits and threats of economic migration to an economy. Key trends and characteristics: Immigrants are classified into two distinct groups, economic migrants , who are individuals searching for high standard jobs and economic security and refugees, who are individuals fleeing persecution in their home country (Cortes 2001, p,41). These two categories do of course overlap. Higher numbers of migrant workers are from the EU accession states that is the most leading trends of recent economic migration. Immigration levels to the developed countries have increased in recent years, mainly driven by on going economic growth in the UK and by the opening of the labor market to the new EU accession states since recently (Marangozov, 2007). For example, between three months in 2007, the number of applications from the A8 countries (Czech Republic, Estonia, Lithuania, Hungary, Poland, Latvia, Slovakia, and Slovenia) has been dropped to 50,000 from 52,000. The numbers thus have been coming to decline overall- during the above mentioned three months of the previous year, 56,000 workers registered (workpermit.com, 2007). The UK was one of the few EU nations opening its labor market to the ‘A8’ countries when they joined in 2004, causing a heavy inflow of immigration to the country. In response, the UK placed restrictions on some developing nationals when their countries joined the EU on January 2007 (workpermit.com) Worldwide Immigrants Statistics: Worldwide, there is around 191 million immigrants and the last 50 years have seen an almost doubling of immigration, out of them around 115 million migrants are living in developed countries; 38 million immigrants that account to be 20% are living in the US alone. According to some estimates, around 33% of all immigrants are living in Europe and a major portion of it lives in around 28 countries. Women immigrants are approximately half of all migrants (Shah, 2008). Below are some of the recent statistics showing immigrants to developed and industrialized countries; On an average of 2.4 million per year, there were 36 million migrations between 1990 and 2005 33 million immigrants were wound up in industrialized countries between 1990 and 2005 17 countries have found an increase of 75% of the increases in immigration between 1990 and 2005 72 countries have recorded a decrease in immigration (Shah, 2008). Effects of migration: Migration can have positive and negative impacts on both the host (recipient) country, and the original country as shown in the figure below. Whatever may be, the net effects of migration were generally in a positive result. According to The Economist, liberalizing the restrictions on labor migration ‘would be one of the fastest ways to boost global economic growth’ The positive effects, in their opinion, significantly would be greater than that of removing any trade barriers (globalization101.org) Benefits of migration Manpower supply: A good manpower is required to absorb the resources of any country. A large economy like US has more resources. Without sufficient manpower these can’t be utilized. Immigrants may be ready to do the jobs that people in the host country may not be ready to do or can’t do; so the migrants offer various benefits. The infusion of cheap and eager labor into the economy is one of the results for positive gains from immigration. In many developed countries, migrant workers often fill low-wage jobs for which the local supply of labors may not available, such as agricultural farm and labor. The imports of cheap industrial goods benefit the American economy, then the benefits increase in the import of cheap labor. The migration has little impact on wages or job availability for domestic workers according to economists who support the notion of these positive gains. It is also required to be noted that the remittances of manpower from its cheap unskilled labor force of some country, like Tajikistan, to some developed countries has helped the country overcome the failures of a planned economy and government instability, contributing around 50 percent of the GDP of those countries in recent years. Resources utilization: As mentioned earlier, the resources of a country need to be utilized effectively. Reports from developed countries expose the fact that people who come from different backgrounds do well in their local area (the current indicator by which community cohesion is measured). Human capital is considered to be most powerful assets especially in business terms and therefore immigrants play vital role as economic resources. If these resources are utilized effectively, the economy will benefit largely from the immigrants. The latest information from the same survey shows that this figure is increased to 81 per cent in recent times. Cultural relation and community cohesion: Different countries have diversified cultures. Migration helps both the host and recipient countries interlink their cultures and it creates multicultural background in such countries. Culture is an important media to portrait the historical line of countries. In those fields where migration can be linked to poor community cohesion, cultural cohesion is a main element and more powerful factor that up to an extent reduce rapid population turnover, unemployment, crime, scarcity and deprivation and anti-social behaviour. Of course, evidence from the Joseph Rowntree Foundation has demonstrated that the impacts of immigration to the local circumstances vary largely (Robinson and Reeve, 2006). Low wages keep inflation low Low Inflation is a phenomenon where the prices of goods and services do not increase rapidly. This situation is not much harmful for any economic system because it would be controlled by the adoption of certain procedures. But, the high inflation is almost uncontrollable. When inflation is relatively low, people and businesses would be able to plan as they are aware of the purchasing power of their money and that it will not be steadily eroded year after year. Low inflation is more likely to result lower nominal and real interest rates. Low interest rates are found to reduce cost of borrowing, causing to encourages households to purchase durable goods like houses, buildings and vehicles. It also encourages people, mainly businessmen, to make investment so that they can improve productivity and can compete and make prosper without steadily having to raise prices. Dynamism in economic activity such as buying goods and services: Economy of different countries is dependent upon the buying and selling of goods and services. People make purchases every day and as consumers, they have specific rights and responsibilities and they play significant role in the economy. The migration helps countries increase the economic activities such as buying and selling of goods and services and this helps the economy of the host country remain always dynamic. Business relation: Migration helps developing countries open a good business relation with the country of migrants by gathering the information from him about the tastes and preferences of their natives. As migrants become an integral part of the host country and various departments and government bodies attempt to serve them better by collecting relevant information about them and their countries, businesses would be more likely to develop products and services according to their preferences too. This would bring closer business relation as well. Migrants contribute to maintain better business relation because: Migrant workers often work for lower salaries and longer hours, the host country thus acquires the benefits, Immigrants can contribute to the diversity of that society and this can have positive impacts on maintaining business relation, Immigrants, if they have been well educated in their original country, can offer an increased talent pool for the host country’s business developments, Threats of economic migration Low wages keep other workers wages low: The low wage given to some of immigrant workers may create wage-issues among other workers. Immigrants workers may work for cheap wages or salary mainly because the amount receiving from developed country may be more valuable than that of their home economy. Increase in criminal acts While comparing the intervention of natives and foreigners in criminal activities, it can be found that the foreigners possess the lead in criminal activities. Literatures reveal that people who came as immigrants to a country are more likely to be involved in crimes. This has long been the case in the US and many other countries. A good example is that in early 1850s, more than half of the total criminals were among the immigrants. As Busey (1856, p. 117) described, the census of 1850 shows that the whole number of persons convicted of crime in the US during the year ending 1850 was 27000, of which 14000 criminals were from foreigners. Use of government subsidized services without paying taxes: Refugees or migrants can use the government services allowed to them. They use subsidies allowed by the government. Especially the developed states can allow more rebates and subsidies for the community living in their states because of having enough flow of resources and funds. Sending money to home country The migrants send money to their home country. Almost all countries try to increase the flow of foreign currencies and this can positively impact the economy of the original country, but in contrast, it affects the host country’s economy negatively. Increased cost on society in terms of larger population (i.e. public transportation): Large facilities are required to accommodate the immigrants in a country. In order to accommodate immigrants and to ensure that they receive better services, the government of the country has to arrange basic and other facilities like transportation. It thus requires to have larger amount of natural resources for facilitating these infrastructures. Conclusion Migration has extremely significant impacts on the economies of both the original and host countries. When skilled and efficient labors are migrating to another country, it is significantly a loss of greater potential to the original country whereas potential gains to the host country. This paper has highlighted major advantages and disadvantages of economic migration and detailed various factors that determine why economic migration is an important topic in economics today. References Busey, SC, (1856), Immigration: its evils and consequences De witt and davenport publishers, New York Cortes, K.E. (2001), Are refugees different from economic immigrants ?: some empirical evidence on the heterogeneity of immigrant groups in the United States, Economics University of California, Berkeley Working Paper no.41. Marangozov, R (2007), What are the impacts of economic migration to the UK? Institute of employment studies Robinson D & Reeve K (2006), Neighborhood experiences of new immigration: reflection from the evidence base. Joseph Rowntree Foundation Shah, A, 2008, Immigration, Global Issues.org, Retrieved from http://www.globalissues.org/print/article/537 workpermit.com, 2007, UK - A8 countries, Bulgarian and Romanian migrant statistics, Retrieved 07th May 2011 from http://www.workpermit.com/news/2007-08-21/uk/uk-a8-romanian-bulgarian-accession-statistics.htm Read More