Economic Migration And Its Impact On The Economy Economics Essay

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 risen significantly over the past 10 years, driven by sustained economic growth in the UK and the opening up of the labor market to the new EU accession states since 2004. For example, between April and June of 2007, the number of applications from the A8 countries (Czech Republic, Lithuania, Estonia, Hungary, Poland, Latvia, Slovakia, and Slovenia) dropped to 50,000 from 52,000 during the first quarter of 2007. The numbers have been coming to decline overall- during April – June 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 an estimated 191 million immigrants and the last 50 years have seen an almost doubling of immigration, out of them 115 million immigrants living in developed countries; 20% (approximately 38 million) living in the US alone, making up 13% of its population. Approximately 33% of all immigrants live in Europe and a major portion of it lives in just 28 countries. Women constitute approximately half of all migrants at around 95 million.

Between 1990 and 2005

There were 36 million migrations (an average of approximately 2.4 million per year),

33 million wound up in industrialized countries;

75% of the increases occurred in just 17 countries;

Immigration decreased in 72 countries in the same period;

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 unemployment, rapid population turnover, crime, deprivation, and anti-social behaviour. Of course, evidence from the Joseph Rowntree Foundation demonstrates that the impacts or effects of immigration at the local level vary significantly, depending on the prevalence of such factors, and how these factors inter-relate (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 low, consumers and businesses can make long-range plans because they know that the purchasing power of their money will not be steadily eroded year after year. Low inflation results lower nominal and real (inflation-adjusted) interest rates. Low real interest rates reduce the cost of borrowing. This encourages households to purchase durable goods, such as houses and autos. It also encourages businesses to make investment in order to improve productivity so that they 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.