Gross Domestic Product Growth in the United States - Essay Example

of the Concerned Microeconomics 14 September 2008 Immigration Returning refreshed from their summer break on September 19, 2006, the Springfield city councilors never new that a controversial issue like immigration will pop up before them in a strange and unexpected disguise (Eugene 1). A local resident named Curtiss Greer greeted the official meeting dressed as Abraham Lincoln (Eugene 1). The objective behind this whole drama was to protest against the councilors move to "repeal an Oregon statute barring local governments from enforcing federal immigration laws (Eugene 1). Basically what this assertive and conscientious citizen was trying to do was to bring up the burning issue of immigration, once more on the political center stage. Infact the issue of immigration has assumed a transnational importance in the last three decades. It is not without a reason that immigration has become a hot topic throughout the Western world in the contemporary times. Politicians and informed citizens are highly polarized in their opinion regarding immigration because of the impact it may have or is supposed to have on the demography, culture and especially the economy of the concerned nations. More then half a million people from varied countries and ethnic backgrounds enter the US every year. As per some conservative estimates, nearly 12 million illegal immigrants presently call the United States their home. The very magnitude of immigration in North America, EU and Australia raises many disturbing questions. Is immigration good for the countries having liberal immigration laws Will the immigrants have a salubrious influence on the economies of these nations Should the immigration laws be further liberalized Do the economies of these countries have the ability and the potential to absorb the large scale skilled, semi-skilled and unskilled workforce generated by accommodating immigration policies Will immigration lead to many related problems like terrorism, radicalism and surplus workforce Pragmatically speaking, immigration is bound to stimulate the Western Economies. At least, the available demographic and economic data points towards this conclusion. It is a basic economic fact that the fast growing economies do have an insatiable hunger for resources, physical capital and above all human capital. So the fundamental query should be that are the major Western economies growing at a pace where they need tremendous input in terms of human capital from other countries It will be really interesting to look into the economic prospects of some of the topmost Western economies. As for the US economy, the data furnished by the authentic and reliable global organizations like the World Bank, the International Monetary Fund, and the Organization of Economic Cooperation and Development, targeted at the eight years of Bush's presidency indicate a pink and plump state of affairs (Perry). According to the World Bank statistics, the GDP per capita in the United States rose to $ 41,813 in 2005 (Perry). As per an IMF report, between the years 2001-2008, the real American GDP "grew at an average annual rate of 2.2 % (Perry)." The unemployment rate in the US also stood at a tolerable and stable figure of 4.7 % between 2001-2007 (Perry). Gross Domestic Product (GDP) Growth - United States - USA (%) 2.5 3.7 4.5 4.2 4.4 3.7 0.8 1.6 2.5 3.9 3.2 3.4 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Gross Domestic Product (GDP) Growth - United States - USA (%), Source: Eurostat (euroekonom.com) European Union, which is the largest economic and trading block of the world, is also expected to outperform the past expectations in terms of economic growth in the coming decades. Infact the UK's GDP per capita is expected to rise to $ 48,000 in 2008 (Oxford Economics 1). This increase projects a coming decade of sustained economic growth. In 2007, UK boasted of an impressive real GDP growth rate of 3.1 %, while maintaing a humble unemployment rate of 5.4 % (The World Factbook). Germany the 5th largest economy in the world also enjoyed a real GDP growth rate of 2.5 % in 2007 (The World Factbook). The unemployment rate in Germany was a bit high at 8.4 % (The World Factbook). Going by this data, The European Union is faced with the onerous task of sustaining a competitive and persistently growing economy in the times to come that will require ample human resources. United Kingdom GDP Growth (YoY) (TradingEconomics) Though Australia is at par with most of the dominant Western European Economies, it is experiencing the growth related problems owing to a tight labor market (The World Factbook). Australia had a GDP per capita of $ 36,000 and an impressive real GDP growth rate of 3.9 % in 2007 (The World Factbook). The unemployment rate in the year 2007 was also relatively controlled, standing at 4.4 % (The World Factbook). Going by the running high export prices of agricultural products and raw materials in the international market, Australia is expected to enjoy a booming economy in the coming decade (The World Factbook). Australia GDP Growth (YoY) (TradingEconomics) It is a fundamental economic fact that the growing economies need a commensurate young and able workforce. Labor is the single most important factor of production. Thus it is imperative for the aggressive economies to maintain a pragmatic birth rate that can keep pace with their growing need for labor. In this context, it will be relevant to peep into the population related data of the above mentioned economies. It is an eye opening fact that the US fertility rate "dropped to less then replacement fertility level in 1972, and by 2002 has dropped to a record low (SUSPS)." On an average, the US women give birth to less then two children, whereas the required replacement level fertility rate is 2.1 children per women (SUSPS). As per the statistics provided by the Centres for Disease Control (CDC), the US birth rate dropped to an all time low of 13.9/1000 persons in 2002 (Longley). As regard to the women of peak child bearing age i.e. the women in the age group of 20-30, the birth rate has dramatically declined (Longley). According to an NPG demographic analysis," had there been no immigration to the U.S. since 1990, the population in 2000 would have been 262 million, 19 million less then the 281 million counted (Negative Population Growth)." The active participation of women in the workforce and the trend of delayed marriages is one main reason for this crises situation. U.S. Birth and Death Rates (encarta) Considering the augmenting economic growth and an accompanying declining birth rate, liberal immigration policy is a practical necessity, if the US economy is to sustain itself. Total Fertility Rate, UK Total Fertility Rate, UK (nationalSTATISTICS) The situation in the important European economies like the UK is even worse as compared to the US, where the Total Fertility Rate (TFR) declined to a pathetic low of 1.63 children per women in 2001 (nationalSTATISTICS). According to the Office of National Statistics, the birth rate shot up to a heartening 1.87 children per women in 2007 owing to an increase in immigration (Martin).1 As in the other developed economies, the birth rate in Australia has been declining over the years. The replacement fertility rate happens to be 2.1, whereas the Total Fertility Rate (TFR) stood at an alarming 1.75 in 1999 (Department of Family and Community Services). The situation has become more drastic because of the ageing population in Australia. Things are expected to improve with the rise in immigration. Total fertility rate (Australia) (Australian Bureau of Statistics) Immigration is the direct response to the developed nations' need for cost effective, young and productive labor in the era of dwindling birth rates. Infact it has been seen that during the prosperous years, the volumes of immigrant work force augmented to more then average levels as compared to economically constrained times, as is evident from the graph below. The post II World War economic resurgence in America created a great need for inputs in terms of human capital that could only be met through liberal immigration laws. Immigration is a cardinal need of the developed economies of the West and it is imperative to their survival and sustenance. In the contemporary era of IT revolution and digital technology run economies, the Western economies are especially dependent on the brain drain from the developing economies like India, China and South Korea which have large pools of skilled and semi-skilled labor and are the home to some of the large chunks of information literate work force that is looking for higher wages and better work opportunities and work environment. Thus immigration symbolizes a win-win option for both the developed economies and the immigrants. US Immigration 1900-1990 (Internet Modern History Sourcebook) Developed nations do have the need and capacity to absorb and employ considerable amounts of immigrant population. Some of the pseudo-moralist, conservative sections of the society oppose immigration by resorting to the logic that immigration amounts to the exploitation of the immigrant labor by grossly underpaying it. Now the West which happened to be a vociferous supporter of the free markets and free economy in the days of the yore cannot backtrack from this era of flexible labor markets (The Wall Street Journal). Infact the migrants adopt the developed countries out of the expectation of getting just wages for their labor that could prove to be immensely helpful in raising their standards of living (The Wall Street Journal). The problem of illegal immigrants is being caused by stringent immigration laws (The Wall Street Journal). This calls for liberalizing the immigration laws on a priority basis so that the deserving migrants could get a fair chance to become a part of the developed economies and societies. The immigration policies in the North America, European Union (EU) and Australia definitely need to be synchronized with the current "economic and human realities" (The Wall Street Journal). Earlier the impetus for uncapping immigration was initiated by the private corporations. Now a number of government aided agencies and state organizations have verified through various studies that immigration is vital to the economic growth in the US. As far back as in the year 2000, the Federal Reserve Board reported a severe and widespread dearth of workers in almost all the sectors of the US economy (Allan & Danilov 1). Many leading economists have time and again testified before the congress regarding the debilitating effects of the labor shortage in the American economy. The Federal Reserve Board chairman conveyed to the congress that, "worker shortages have serious implications for our economy, and that unless a solution is found to the shortages, inflation will rise as profit margins will be squeezed Immigration is a solution to our worker shortages (Allen & Danilov 1)."2 Thus immigration is essential for maintaing the economic stability in the developed economies. The arguments for liberal immigration policies came under a dark cloud after the 9/11 mayhem and the tragic London and Glasgow bomb blasts. Fear of terrorism is threatening to freeze the immigration plans of many vibrant economies. Besides, a more then average protest against immigration is being registered by the conservative, right wing, xenophobic and nationalist pressure groups in the West. However, the clock cannot be turned back. 21st century is all about free flowing work force and information. What can be and should be done is that the immigration laws and procedures can be further evaluated and appropriate mechanisms and protocols can be introduced to monitor the inflow of immigrants with caution and concern. Immigration is not a necessary nuisance but the basic need of the developed world that is expected to gain more relevance and importance in the times to come. With falling birth rates, growing healthcare and pension costs and propitiously booming economies, liberal immigration laws seem to be the only panacea for maintaing high growth rates and ensuring economic stability. However, the immigration requirements must be prioritized and organized on a continuous basis and appropriate checks and measures need to be placed to attract and welcome the immigrants with the desired skills and ethical affiliations. Works Cited Allen, Kaye and Danilov, E. "IMMIGRATION UPDATE: Immigrants are vital for economic growth." Filipino Reporter (27 July 2000). 15 September 2008 "Australia's fertility rates: trends and issues". Department of Family and Community Services (February 2001). 15 September 2008 "Australia GDP Growth (YoY)". TradingEconomics (14 September 2008). 14 September 2008 "Australia". The World Factbook (4 September 2008). 14 September 2008 "Conservatives and Immigration (Edt.)".The Wall Street Journal (10 July 2006). 15 September 2008 Eugene, OR. "City Council silent over immigration appeal (Government) (A Challenge from "Abraham Lincoln" fails to stir debate on the controversial issue. The Register-Guard (19 September 2006). 14 September 2008 "Fertility". nationalSTATISTICS (21 August 2008). 14 September 2008 "Germany". The World Factbook (4 September 2008). 14 September 2008 "Gross Domestic Product (GDP) Growth- United States- USA (%). Euroekonom.com (2008). 14 September 2008 "Historical and Future Population Trends". Negative Population Growth (2008). 14 September 2008 Langley, Robert. "U.S. Birth Rate Hits All-Time Low". About.com (2008). 14 September 2008 Martin, Nicole. "Migrants push birth rate to highest in decades". Telegraph.co.uk. (9 June 2007). 14 September 2008 Perry, Mark J. "Economic Facts: US Economy is Doing Quite Well". Seeking Alpha (4 September 2008). 14 September 2008 "Press Release". Oxford Economics (7 January 2008). 14 September 2008 "Total Fertility Rate". Australian Bureau of Statistics (7 February 2008). 15 September 2008 "US. Birth Rates and Population Growth". SUSPS (2008). 14 September 2008 "U.S. Birth and Death Rates". Encarta (2008). 14 September 2008 "U.S. Immigration, 1900-1990". Internet Modern History Sourcebook (4 March 2007) .15 September 2008 "United Kingdom GDP Growth (YoY)". TradingEconomics (14 September 2008). 14 September 2008 "United Kingdom". The World Factbook (4 September 2008). 14 September 2008 Read More