Are trade and development substitutes for migration? The effects of trade and development vary across time and space. In the short- and medium-term, migration increases with development, while in the long-term social and economic improvements within emigrant countries combined with people's preference for home outweigh incentives to migrate. Furthermore, the differences of effects vary according to regions and international borders. These determinants, the progression across time and the outcomes specific to regions, are simultaneously important for policy makers seeking to reduce migration flows.
This paper will address the changing effects of trade and development on
migration in four parts. The first section covers the theoretical explanation
of these effects. The following two sections discuss two case studies exhibiting
the various factors behind migration incentives. These incentives have enormous
policy implications, both for the developed and developing world. Their
ramifications are discussed in the fourth and final section.
Migration Theory
Neoclassical economic thought has long proposed that jobs created in emigrant
source countries will reduce migration from these countries to the First
World. (Jones, 195) Given the focus here on economic incentives the logic
is that once jobs are available at home potential emigrants will lose all
reasons to migrate having attained the means for better standards of living.
The realities are hardly so simplistic.
There are in fact two phases in the relationship between trade and development
and migration. Initially, trade and development improve conditions in the
developing world, reducing obstacles to migration. In this short- and medium-term,
the World Systems Theory applies, in which the process of development reaches
a point at which it only becomes easier for migrants to find a better life
abroad. (Jones, 195)
Development expands transportation infrastructure. Though these improvements
are primarily intended to support market economies within the developing
world, they also reduce the cost of travel. At the same time, the costs
of migration decrease and there are fewer obstacles holding potential future
emigrants back.
Development also increases the availability of information, reducing the
uncertainties one faces as an immigrant. It takes a great amount of courage
to face the unknown. With newspapers, television, the availability of communications
with the outside world via telephones and internet emigrants' destinations
become less of an enigma.
In addition, with development, agricultural societies often become industrial
societies and standards of living improve. Improvements in public health
and subsequently falling mortality rates increase the population. The resulting
larger cohorts, upon reaching employable age, have a harder time finding
work. Either the excess of labor significantly reduces wages or there is
simply higher unemployment. These hardships at home, created by development,
give greater incentives to leave.
Moreover, social capital, understood as "'trusts, norms and networks'
that facilitate social co-ordination and co-operation for the mutual benefit
of society members," has various effects depending on the context.
(Assous, 63) Its growth and existence is instrumental in decisions of whether
to migrate. In one respect, as migrants establish themselves in their new
homes they build social capital which, in turn, increases the attractiveness
of migration for future emigrants; there is less uncertainty to be faced
alone upon arrival. The comforts of a support group in the new home offer
great peace of mind and further reduce obstacles to migration.
Nevertheless, a major inhibitor of migration is the huge psychological impact
of leaving one's family and friends. Social capital can, therefore, also
reduce migration. In Europe, for example, the cultural barriers far outweigh
incentives to migrate within the continent. Migration means leaving homes
in which social capital is often especially high. These comforts to be found
at home reduce incentives to leave and there is, moreover, an overall home
bias.
In the long-term phase of trade and development the social and economic
conditions are so improved that this home bias garners more clout. Migration
occurs "when the attainable future income in the host country is higher
than the income in the home country plus migration costs." (Rotte,
3) Beyond this fiscal account of migration incentives, home bias is especially
instrumental in providing incentive to stay. Furthermore, the micro approach
of 'new economics of migration' theory (compared to the macro approach of
neoclassical theory) specifies that reduced migration will only occur if
jobs are (1) geographically accessible and (2) more attractive than those
offered via migration, and (3) that inveterate migration networks and local
income discrepancies giving incentive to internationally migrate do carry
on in spite of these jobs. (Jones, 195) Migration incentives are driven
both by economic considerations and social considerations (including home
bias).
The process of development eventually reduces discrepancies in standards
of living between the developed and developing world such that home preferences
garner more clout. Moreover, development need not necessarily physically
improve conditions at home. It can often reduce incentives to migrate with
the mere promise of a better life. If people believe that conditions at
home will improve, then their incentives to endure the hardships of migration
are much diminished. It becomes preferable to wait it out, holding on to
the hope of future favorable development outcomes.
The three theories of migration, neoclassical, world systems, and new economics
of migration theory, have their respective relevance in the process of development.
At first migration flows increase, as the world systems theory suggests,
because development eases certain obstacles to migration. Eventually, however,
neoclassical theory becomes relevant as migration decreases subsequent to
further improvements in social and economic conditions. The new economics
of migration theory adds microeconomic perspective to neoclassical theory,
stipulating three prerequisites for jobs created in emigrant countries that
aim to reduce international migration.
Central Mexico
The migratory trends following the decentralization of maquiladoras, foreign
owned assembly jobs, throughout the central parts of Mexico support neoclassical
economic thought. Transnational exporting firms have decentralized faster
than their domestic counterparts, expanding from the urban-developed core
to semi-peripheral regions between the core and the underdeveloped rural
regions to capitalize on the lower wage labor available in these areas.
Manufacturing in these non-metropolitan regions has increased employment.
There is additionally a multiplier effect. Worker remittances to the surrounding
areas have indirectly generated additional employment. Local markets grow
as the investments from abroad trickle out into the surrounding population
via the supply and demand exchange. Rising and new incomes increase standards
of living reducing incentives to leave. Export manufacturing growth has
here reduced international migration from these towns. (Jones, 196) In Central
Mexico, trade and development have begun to substitute migration.
Europe and the Mediterranean
The success of the Euro-Mediterranean effort to reduce migrations flows
from Maghreb countries is contingent upon employment in those emigrant countries.
In this context economic incentives are central to decisions about migration.
Reducing poverty and market constraints would improve social and economic
conditions in the Maghreb countries, reducing their citizens' incentives
to leave. Currently, however, North African economies do not have the institutional
capacity to create enough productive jobs for their growing populations.
Fertility rates are especially high so that future large cohorts will have
even more competition for employment.
Furthermore, trade liberalization can actually create short term unemployment
and reduced wages as North African workers are forced to enter competitive
markets. These competitive markets demand more and more skill intensive
jobs, not just labor intensive ones. Unfortunately, much of the Maghreb
has a long way to go in terms of increasing its human capital. Morocco and
Algeria, for example, have high rates of illiteracy, while their labor force
generally does not supply the demand for technically skilled labor. (Farsakh,
8) Traditionally, the lack of productive skills has not been particularly
egregious; previous agreements gave North African states access to EU markets
without the expectation of reciprocity. More recent agreements, however,
ask these southern countries to open up their markets in return. The challenge
will be for North African states to build their human capital in order to
supply these market demands of the Europe. "[They] need to find new
means to enhance their fiscal revenues from non trade sources, to upgrade
their manufacturing exports in order to penetrate new niches in the EU markets
and elsewhere, and to enhance their regional and international trade."
(Farsakh, 17) Yet Europe's markets do not demand imports alone.
There is demand for migrant labor within Europe as well. Firstly, because
Europe's population is producing smaller cohorts, it is unclear whether
its institutions will have the capacity to care for its aging population.
Immigrants, with their comparatively higher rates of population growth,
provide productive labor, which eases these pressures. Migrants also tend
to establish their own unique niches in labor receiving economies. Finally,
as is common throughout the developed world, migrants fulfill demands for
labor intensive and seasonal agricultural employment, as well as those for
low skilled services. Native populations are less inclined to fulfill these
jobs.
The EU-Mediterranean partnership has the potential to promote growth in
North African states. The outcomes are contingent upon the Maghreb countries'
ability to manage the challenges that trade liberalisation will generate.
Improvements in the south will not necessarily reduce incentives to migrate
if the "pull" dimension of migration persists.
Policy Implications
Development has effects that initially increase migration flows, but, given
time, eventually translate into migratory recessions. This progression,
however, is contingent upon effective development policies that target migration
specific issues. Likewise, some methods of fostering trade are more appropriate
than others.
Regional integration is, in particular, more constructive than basic free
trade agreements. The good-natured relations can indicate favorable conditions
for investors who then increase their financial transfers to the developing
region. Also, foreign direct investment is especially instrumental in creating
employment, thus reducing migration potential. Both financial transfers
and foreign direct investment promote further development effectively increasing
the rate at which a developing country progresses towards the 'long-term'
phase, in which migration flows recede.
Moreover, the "demand side" of migration is important. In fact,
a large portion of today's unwanted migrations began with actual recruitment
on the part of industrialized countries. Their demand created emigration
countries and some industries have grown dependent upon immigrant workers
because they are the only labor force willing to perform unskilled work
under more dangerous and strenuous conditions. As long as the developed
world has a demand for immigrant labor there will be a supply.
The issue of migration must ultimately be addressed in both the developed
and developing world. Policies can influence the cross-border incentives
driving international migration. These incentives change as the process
of development progresses. Policy makers have done well to focus on improving
social and economic conditions in emigrating countries as it enhance the
bearing of home bias in decisions about migration. It is also necessary,
however, to implement policies that curtail the demand for labor in the
developed world if reduced migration flows are indeed desirable.
Trade and development can indeed substitute migration; however, this outcome
is contingent upon the progression of development. In the short- and medium-term
trade and development actually increase migration flows, but eventually,
in the long-term, these flows subside. The extent to which policy makers
can make a difference relies on their ability to address the multiple dimensions
of migration in the developed and developing world as well as their ability
to foster rapid yet effective development, reaching the long-term phase
sooner.
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Jones, Richard C. (2001), "Maquiladoras and U.S.-Bound Migration in
Central Mexico", Growth and Change v32, n2 (Spring 2001): 193-216.
Farsakh, Leila (2000), "North African Labour Flows and the Euro-Med
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n1 (June 2000): 58-79.