Politics of the Global Economy: Assignment

POLITICS OF
THE GLOBAL
ECONOMY

INTRODUCTION
• Primarily ,Migration is the movement of persons from one place to the other.
• Reasons for migration could be
• Economic,
• Political
• Social,
• Environmental.
• There are economic benefits stemming from the migration of persons.
• However, there are various disadvantages of migration such as over-
population, unemployment, rise in crime rates e.t.c.
• Overall, migration of human capital, technology has greatly benefitted the
international economy.

ECONOMI C G AI NS O F MI GRATI ON
• Through migration of workers, there is an increase in the laborforce.
• Specifically, the immigration population increase the American labor
force by forty –seven percent and seventy percent in Europe between
2004 and 2014(O.E.C.D,2014)
• The migrants are able to fill the labor force in countries with fast
growing aged population.
• Working population ratios are boosted by the ever-growing number of
immigrants thus filling the unemployment challenges in most European
Countries.
• In addition to filling job opportunities, immigrants also pay
taxes(Campbell,2018).

LABOR MARKET GAINS
• For countries lacking trading power in foreign markets, immigrations
increases the trade gains(Chang,1988).
• With the free movement of persons from one country to the other,
there is the exchange of skilled and unskilled laborers .
• Migrant labor services are likely to increase the wages and salaries
for native workers
• Due to the fact that foreign laborers come with valued workplace
experience might boost the economic efficiency and revenue for the
foreign country .
• Migrant workers who are skilled are a huge benefit for the foreign
economy

TEMPORARY SKILL
PROGRAMS
• Under immigration, temporary migrant workers programs can be used to boost the skill
shortage of a foreign country.
• The effects of this worker programs can be both positive and negative.
• Positively, worker programs are able to fill the skill gap in the foreign country for a given
period of time.
• Particularly, in the United States of America, Migrant workers are absorbed into the agriculture
and service industries .
• However, these programs might cause a decline in domestic salaries and wages(Levin
Institute,2017).
• The fact that immigrant workers are able to temporarily fill worker skill gap s,generates
revenue for the foreign country thereby contribution to the gross domestic product of the given
foreign country.

LABOR FORCE PARTICIPATION
• Migrant labor is responsible for the increased labor participation levels.
• Particularly, the Australian labor force participation levels rose by 2%
between the year 200-02 due to the influx of migrants from other
countries(Cully, n.d).
• The migrants are able to fill employment gaps in foreign countries.
• The migrants are likely to fill employment opportunities with low wages .
• Natives tend to occupy the high wage paying employment opportunities
thereby leaving a huge unemployment gap in low paying jobs.
• This employment gap boosts the employment chances for migrants in foreign
countries.
• The employment of migrants in foreign nations enables them to partake in the
labor work force in that country.

PRODUCTIVITY
• Migration has brought an increase in the working population.
• Between the year 1990-2015,advanced economies have recorded significant increases in the
working age group .
• The migrant population has contributed to this increase in working age capacity(Jaumotte,
Loloskova & Saxena,2017).
• Migrants are held responsible for the increased economic growth rates in most advanced
countries(Roy & Debnath,2011)
• In addition, migrants have boosted productivity levels in foreign advanced
economies(Colson,2016).
• The fact that resources are likely to be fully utilized due to the migrant labor, could make the
production of goods more efficient.
• Migrant labor helps the supply side of the economy to meet the demand in the foreign country
thus it’s importance.

GROSS DOMESTIC PRODUCT GROWTH
• An increase in immigration creates a double Gross domestic product per
capita in the long term(Colson,2016).
• The GDP (per capita) increase is attributed to the increased labor
participation of the migrant population.
• The recent, Brexit move to curb immigration is estimated to cause an
decrease in the country’s GDP (Colson,2016).
• Increased labor participation equals increased production of goods and
services thus leading to increased Gross domestic product for a country.
• In the event of reduced labor workforce, there will be a decrease in
domestic and international production volume which leads to loss of
massive revenue thus reduced economic activity.

SUSTAINING ECONOMIC
GROWTH• Migrant labor is responsible for sustaining economic growth(United
Nations,2011).
• Through immigration, there is the much needed transfer of skilled and
unskilled labor, human resource, knowledge, innovation which are very
vital for the growth of international trade.
• Through migration of laborers, there is an interaction of different ideas
and ways of production, technology which is key in promoting high
quality production of goods .
• Also , through transfer of knowledge, research and development can be
put in place to keep the products competitive through newer innovative
designs and processes.

• Migrant labor can be a substitute for the foreign countries struggling
with fast-aging working population.
• Immigrants are able to replace the ageing population.
• Also, skilled and unskilled migrants are able to form social ties
through marriages and other unions giving birth to the future
working population.
• Migrants role of procreating is also important in the rejuvenation of
the labor force in most countries.
• It is important that there be controlled migration due to the risk of
overpopulation in the foreign country.
• There is need to encourage reasonable migration patterns as
opposed to an uncontrolled immigrant system.

BOOSTS EMPLOYMENT
RATES• Through the employment of migrants ,skilled and unskilled migrants, the
economic and individual economic welfare improves.
• In the United Kingdom, the migrant employment has greatly boosted the
country's gross domestic product and its employment rates.
• Migrant employment has helped reduce the unemployment rates in the
country by filling jobs which natives cannot fully supply.
• Through employment of immigrants, the economic welfare of the
migrants, its citizens improves through public provision of services
partly funded by the revenue from migrant activities.
• The economic welfare of a country is measured by the revenue, economic
livelihood, income, government debt, which migrant labor contributes to
the public expenditure which contributes to the country welfare.

• The fact that migrants are employed in foreign countries, makes the
unemployment rates of those countries lower.
• Though it might be argued that migrants reduce the employment
opportunities for the native population.
• It is important that there be a balance of employment between native
and migrant population .
• However due to the fact that most natives are chosen for highly
skilled jobs, skilled migrants might have to settle for unskilled jobs
or lower pays.

• The fact that unemployment is one of the key reasons for
migration. ,the fact that migrants get employed in other countries is a
remarkable unemployment reduction rate globally.
• The fact that there is skill and talent transfer among countries ,makes
it possible for migrants to be employed in different countries.
• Also, migrants have contributed to population increase in destination
countries through marriages and children who are very important for
the future labor workforce(Bove & Elia,2017)
• Economic activity thrives on the availability of labor.
• With high immigration rates into the countries with high ageing
population ,migrants are able to procreate thereby contributing to the
future labor force for the country.

INCREASED INCOME
PER INDIVIDUAL
• Eventually ,skilled and unskilled migrants increase individual income and livelihood
standards(Merler,2017).
• Whereas skilled migrants contribute their expertise and low skilled migrants fill
undersupplied employment opportunities, the economic gains are enjoyed by the
whole population, migrants and natives.
• Native employers are bale to make profits through skilled and unskilled migrant
labor.
• Skilled and unskilled migrant laborers are able to receive wages and salaries thus
lifting their living standards and income.
• Migrant labor benefits the income of native employers, migrant laborers and the
country through taxation and exportation of products made through migrant laborer
outputs.

AFFORDABLE
LABOR• Migrant labor in most countries is cheaper as compared to native
labor(Yifan,2012).
• This cheap labor has made the economic growth of the Chinese economy to
rise tremendously.
• In addition to the cheaper labor brought about by migrants, the Chinese
economy is majorly composed of an ageing population.
• Migrant workers are able to fill the employment gap created by the fast
ageing Chinese working population.
• The Chinese migrant labor quality is improving thus improving the wage gap
and the productivity levels of products and services in China.
• Cheaper labor has the potential to make a country economically competitive
thus increased foreign revenue and Gross domestic product.

• Native employers employ migrant laborers due to the cheap wages they
incur(Hill,2016).
• This cheap labor costs boost the profit margin for these companies.
• While migrant labor might be obtained illegally, its economic benefits to employers
cannot be ignored.
• Despite being inhumanly treated through low wages and more working hours, the
economic benefits to employers in terms of more production and low production
costs cannot be overlooked.
• Due to the high number of migrants, native employers have a large pool of labor to
choose them to maximize their profits.
• Migrants are important to the expansion of companies due to their labor availability
and affordability.
CHEAPER
LABOR

• The fact that some of the migrant laborers are unskilled, limited there
employment chances in better paying employment
opportunities(Jacoby,2012).
• Skilled laborers usually earn more than unskilled labor.
• Unskilled migrant laborers are eligible for low cut jobs which are
available in foreign countries.
• For the American economy, migrants are mainly absorbed in the less
skilled sector of the economy .
• In the event that immigrant workers are removed from American soil,
various unskilled employment industries such as the service and
agriculture industry will suffer a serious unemployment gap and
collapse.
• This goes to show the importance of unskilled migrant labor to various
sectors of the economy for different countries.

TECHNOLOGY
TRANSFER• Through migration of people, there is a technological transfer(Audretsch
et.al,2012).
• The absorption of skilled migrant employees into organizations can be
beneficial for the companies, due to the unique talent and skill they offer the
company.
• In addition, there is exchange of management, production tactics which are
quite different from the native way of doing things.
• Technological advancement and development can be achieved through the
incorporation of skilled labor migrants into organization management
positions.
• Due to the different cultural and technological disparities among countries, a
balanced technological approach might lead to better organization
performance.

REVENUE
INCREASE• Migrant labor impacts on the fiscal balances of various
countries(World Bank, n .d).
• With the increased production of goods and offering of services
capacity, the trading volume of this foreign countries increase.
• When migrant labor products are exported or services offered, there
is an increase in the exportation revenue of that country hence the
increase in the fiscal figures.
• Migrant labor contributes to the gross domestic product values of
foreign countries where the labor is offered.
• Fiscal balance is affected by the level of service rendered or goods
produced.

INNOVATION
BENEFITS• Migration has lead to growth of innovation rates (Vogel,2014).
• With the different cultural diversities brought about by immigration, it is possible for newer ways of
production to be developed.
• Countries with skilled migrants from technologically development countries, are a huge asset to the
global economy.
• Some countries outsource technological and medical migrants for the purpose of research and
development thus boosting the innovation levels in the foreign country.
• Innovation is made easier with the availability of skill, talent and research resources which are available
in one country more than others.
• Through migrant labor, innovation is attainable.
• It is important for countries to engage in research and development with persons of various cultural and
technological expertise for better innovative results.
• Through migration ,research and development initiatives among different countries can be easily set up

REFERENCES
• Audretsch ,B .D. ,Lehmann, E.E., Link, N.a & Steinecker.((2012).Technology transfer in a global economy .Retrieved from
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E9fXaAhWHSBQKHd2wDvIQ6AEITDAI
• Bove, V & Elia, L.(2017).Why mass migration is good for long term economic Growth. Retrieved from https://hbr.org/2017/04/why-
mass-migration-is-good-for-long-term-economic-growth
• Campbell, F.A.(2018).Undocumented immigrants pay billions of dollars in federal taxes each year. Retrieved from
https://www.vox.com/2018/4/13/17229018/undocumentedimmigrants-pay-taxes
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• Colson, T.(2016).Report: Britain's Brexit plan to curb immigration will damage the economy. Retrieved from
http://uk.businessinsider.com/imf-migrants-drive-up-gdp-and-productivity-in-advanced-economies-2016-10?IR=T
• Cully ,M.().How Much do migrants account for the unexpected rice in the labour force participation rate in Australia over the past
decade? .Retrieved from https://www.homeaffairs.gov.au/ReportsandPublications/Documents/research/migrants-account-unexpected-
rise-labour-force-rate-aus-2000-2010.pdf
• Hill ,P.T.(2016).Big employers no strangers to benefits of cheap labor ,illegal labor. Retrieved from
https://www.texastribune.org/2016/12/19/big-name-businesses-exploit-immigrant-labor/
• Jacoby, T.(2012,April 17).Without immigrant labor, the Economy would crumble. New York Times. .Retrieved from
https://whttps://www.texastribune.org/2016/12/19/big-name-businesses-exploit-immigrant-labor/ww.nytimes.com/roomfordebate/
2011/08/17/could-farms-survive-without-illegal-labor/without-immigrant-labor-the-economy-would-crumbl

REFERENCES
CONTINUED….• Jaumotte,F.,Koloskova, K.,& Saxena, C.S..(2017).This is the impact of migration on
productivity. .Retrieved from https://www.weforum.org/agenda/2017/01/this-is-the-impact-of-migration-
on-productivity
• Merler, S.(2017).The Economic effects of migration. Retrieved from http://bruegel.org/2017/01/the-
economic-effects-of-migration/
•O.E.C.D.(2014).Is migration good for the economy .Retrieved from https://www.oecd.org/migration/OECD
%20Migration%20Policy%20Debates%20Numero%202.pdf
• Roy, N & Debanth, A.(2011).Impact of migration on economic development: A study of some selected
states. Retrieved from https://pdfs.semanticscholar.org/7f6b/520f061ccbc387fa1c94c5eb0384eea0dbdf.pdf
• United Nations.(2011).Global importance of migration for development. Retrieved from
http://www.un.org/en/development/desa/news/population/importance-of-migration.html
• Vogel, T.(2011).The Gains and Losses of Migration. Retrieved from https://www.politico.eu/article/the-
gains-and-losses-of-migration/
• World Bank.(N.d).Potential Gains from international migration. Retrieved from
http://documents.worldbank.org/curated/en/507301468142196936/841401968_2005103190201050/
additional/343200GEP02006.pdf
• Yifan, H.(2012).Cheaper labor will continue to work for the Economy. Retrieved from
http://www.chinadaily.com.cn/business/2012-10/12/content_15824892.htm