P&C the November 2013 issue

Welcome Signs

Some nations improve their economies by embracing new immigrants. Others slam the door shut. What is the formula for success?
By Steve Giegerich Posted on October 30, 2013

“Immigration has always been a balance between push and pull factors,” explains Ray Marshall, professor emeritus and founder of the Lyndon B. Johnson School of Public Affairs at the University of Texas-Austin. Marshall, a Secretary of Labor in the Carter administration, is a founder of the Washington-based Economic Policy Institute. “People are pushed out of some places and pulled into others.”

Threads of famine and war, repression and persecution run through the most compelling migration narratives, but the factor that most often compels men, women and children to bid farewell to what is typically the only home they have known is far less complex.

“The main drivers of migration are essentially economic,” says Madeleine Sumption, a senior policy analyst and assistant director of the International Program with the Migration Policy Institute (MPI). “People are willing to take a lot of risks to escape poverty.”

“The main drivers of migration are essentially economic. People are willing to take a lot of risks to escape poverty.”

Risk-takers, or voluntary migrants, are thought to comprise the majority of the 214 million people classified by the International Organization for Migration (IOM) as international migrants. Immigrants account for one out of every 33 people across the globe. According to the IOM, their numbers have increased by 64 million over the past 13 years. Were the migrant population concentrated in a single geographic area, it would comprise the fifth most populous nation on earth.

There is nothing to indicate an easing of the perdurable cycle of push and pull. People will continue to migrate. Only the catalysts change.

Today, terms such as the Arab Spring, circular migration, global economics, climate change and digital technology—topics all but unheard of two decades ago—are seeping into the migration conversation.

On the U.S. domestic front, the primary focus remains on full citizenship for unauthorized immigrants and their families, tightened security along the Mexican border and other issues that have Congress constantly deliberating on reform. Barely below the surface lurk the ugly subtexts of nationalism, jobs and ethnic identity.

Looking ahead, the transformation of the United States into a nation with a majority of ethnic and racial minorities is just one piece in the global socioeconomic and demographic shifts about to unfold in the years to come. Sumption cautions that migration, like economics and electoral prognosticating, is an inexact science.

“It’s difficult to predict,” she says. “There will always be crises around the world.”

While unforeseen crises will undoubtedly sway the future of immigration, a 2013 study co-authored by Sumption provides a helpful map outlining the direction the tides are shifting. The study, “Attracting and Selecting from the Global Talent Pool: Policy Changes,” places specific emphasis on Organization for Economic Cooperation and Development (OECD) data that shows an estimated doubling of the number of students studying at foreign colleges and universities during the first 10 years of the 21st century.

The OECD, according to the Sumption report, doesn’t anticipate international higher education enrollment ebbing at any point in the future. Sumption and fellow MPI researcher Demetrios Papademetriou believe the surge in foreign student post-secondary education could further diminish the economic sectors that once dominated the pull side of the migration equation—agriculture and manufacturing.

The corresponding gains, they postulate, will flow through “knowledge-based industries such as high-tech manufacturing and financial business services, as well as rising skills requirements with occupations across the economy [that] have put a premium on high-quality education, training, and the acquisition and constant honing of skills.”

Sumption and Papademetriou also conclude that the years of traditional immigration—that of transients descending on a single nation or region—is on the wane. Immigrants no longer look instinctively to the United States or the countries in the European Union as lands of plenty.

Researchers instead are seeing increasingly emigration to “emerging economies,” such as Russia, the Gulf States, Southeast and South Asia, India and China—areas that are poised to become, according to Sumption and Papademetriou, “players in the talent game.”

The MPI researchers have an ally in Jeffrey Williamson, the Laird Bell Professor of Economics at Harvard University. Williamson, a recognized authority on emigration and economic policy, envisions a “pronounced relative rise within the third world and a pronounced relative fall in migration between the third world and the west.”

Momentarily setting Williamson’s pronouncements aside, it is instructive to note the most significant migration in the first half of the 21st century will likely occur within a single nation: China. In a detailed report on rural-to-urban migration in the world’s most populous country, McKinsey and Company outlines a quiet transient movement, underway for a decade-and-a-half, that is expected to end with Chinese cities adding 350 million people over the next 11 years. By 2030, McKinsey projects, one billion Chinese will reside in urban settings.

To put those numbers in perspective, 221 cities in China will have populations of at least one million people by 2030, says McKinsey—a number matched by only 35 European cities in 2009.

The population shift from rural outposts to what will ultimately translate into a minimum of six Chinese “megacities” has been fostered if not outright encouraged as a means to bolster economic output by multiple levels of Chinese government.

“Urbanization and China’s robust economic growth have gone hand in hand,” write McKinsey researchers.

McKinsey envisions urban growth in China pushing the needle ever higher. Chinese cities today generate 75% of the gross domestic product nationwide. By 2025, McKinsey forecasts, that number will rise to 95%.

The tradeoff, McKinsey points out, falls into four categories: The “unprecedented” construction of housing stock to accommodate the burgeoning population; the corresponding doubling of demand for utilities and water that is expected to stretch the country’s pollution controls; a possible shortage of skilled laborers, particularly those holding college degrees, to meet the demand for qualified employees; and, perhaps most important, forcing urban localities to identify the financial means to support the influx of business, industry and population about to arrive on their doorsteps.

China must also figure out how to build an infrastructure capable of transporting a billion commuters a day. According to McKinsey, meeting the demand will necessitate the “greatest boom in mass-transit construction in history,” including 5 billion square meters of new roads and 28,000 kilometers of rail transit lines.

By the time the massive population readjustment is completed, McKinsey predicts, Chinese cities will add “between 20,000 and 50,000 new skyscrapers (buildings of more than 30 floors)—the equivalent of up to 10 New York Cities.”

As China strives to meet the petitions of a global marketplace driven by digital-age technology within the confines of its own boundaries, international migration will continue at other points across, and far beyond, the Asian continent.

Famine

In that regard, experts say climate change, a 21st century manifestation of a migratory incentive dating to the Old Testament account of Abraham seeking refuge in Egypt from famine in Canaan, could conceivably enter the picture.

Without entering the political squabble over the merits of climate science, researchers caution that global warming may in fact have a profound effect on migration in the foreseeable future.

“There has always been a fundamental interdependency between migration and the environment,” a recent International Organization for Migration position paper notes. “But the reality of climate change adds new complexity to this nexus, while making the need to address it all the more urgent.”

The IOM postulates the residents of small island states vulnerable to elevated ocean levels will be the most “susceptible geographies” if rising temperatures continue to melt polar ice caps.

“There is no reliable estimate of climate change-induced migration,” the IOM paper notes. “But it is evident that gradual and sudden environmental changes are already resulting in substantial population movements. The number of storms, droughts and floods has increased threefold over the last 30 years with devastating effects on vulnerable communities, particularly in the developing world.”

The caveat about no reliable estimate aside, the IOM is confident enough to gauge that “extreme weather” has displaced 20 million people since 2008. Absent a concerted effort to erase global warming, IOM researchers fear the exponential growth of “environmental migrants” could expand to as many as a billion by 2050.

Be it climate change or any of the other myriad reasons that cause people to relocate, the reception that international transplants might expect upon arriving in a new nation remains one of the pivotal questions hanging over global migration. News accounts show that in many cases discrimination, repression and outright jingoism is alive and well.

“It is evident that gradual and sudden environmental changes are already resulting in substantial population movements. The number of storms, droughts and floods has increased threefold over the last 30 years with devastating effects on vulnerable communities.”
International Organization for Migration

In Switzerland, for example, a move is afoot to stem an open flow of immigrants that has flourished unimpeded for nearly five years. Foreigners comprise a little more than a quarter of the Swiss population—a percentage which, according to The New York Times, stirs apprehension among members of Swiss People’s Party. The Times writes that members of the right wing party favor border checkpoints to reduce the number of future immigrants.

In the United Kingdom, Health Secretary Jeremy Hunt has proposed a £ 1,000 surcharge on immigrant visas. The fee will be tacked on existing fees that the U.K. already imposes on foreigners entering the country.
In the Guardian’s estimation, “The levy is likely to prompt renewed claims that Britain is ‘closed for business’ and hinder higher education institutions in their drive to attract overseas students.” 

Elsewhere, Spain, which continues to welcome immigrants even as its own economy plummets, is nonetheless weathering a steep drop in foreign workers. From a peak of 47.1 million total population, Spain has shed 206,000 residents, many of them transients, says Reuters.

The soaring Spanish unemployment rate, 26%, can be traced to a precipitous drop in home building, an industry that attracted a sizeable portion of the 927,000 workers from other countries that migrated to Spanish soil between 2008 and 2010—a year when the immigrant population stood at 5.7 million.

“There was extraordinary growth (in immigrants) from 2000 to 2009, which is reversing quickly due to economic crisis,” Reuters reports, citing Albert Esteve Palós of the Barcelona Centre for Demographic Studies on Spanish National Radio. “Spain is less attractive because there are no jobs.”

Spain’s acceptance of foreign nationals prior to the recession nonetheless remains a touchstone for other nations seeking to offset the perception that immigrants appropriate jobs from native-born citizens as they impose non-traditional belief systems, languages and rituals on the existing culture.

“Overall, the immigration boom experienced in the 2000s was not accompanied by a surge of public concern, and the migration issue in Spain has not been politicized to any significant degree,” Joaquín Arango wrote in a 2013 paper for the TransAtlantic Council of Migration. “There are no populist, xenophobic, right-wing parties that take anti-immigrant positions at the national or regional level…. Overall, pro-immigrant, anti-racist groups have generally been more vocal than xenophobic ones.” (The autonomous region of Catalonia is a notable exception.)

“Overall, the immigration boom experienced in the 2000s was not accompanied by a surge of public concern, and the migration issue in Spain has not been politicized to any significant degree.”

A Complutense University of Madrid sociology professor, Arango also serves as the director of the Center for the Study of Migration and Citizenship at the Ortega y Gasset Research Institute.

He traces Spain’s “democratic, egalitarian and universalistic” acceptance of immigrants to the political and ideological realignment following the death of Generalissimo Franciso Franco, the dictator who held power from the Spanish revolution until his death in 1975.

The realignment spurred the growth of government-sanctioned health and education benefits for foreign workers. In a classic example of dissemination, Arango wrote, Spanish citizens in 2008 mounted “widespread” protests when conservative members of the Spanish parliament sought to crack down on illegal immigrants.

“Policy has been concerned not with the size of flows, but rather with opening or enlarging avenues for legal immigration,” Arango writes.

Arango sees no reason to believe an economic crisis that forced lawmakers to curtail some open border policies will dampen the national embrace of immigration in the near future.

If anything, he writes, “In the years since the onset of the fiscal crisis, both tolerant and adverse attitudes toward immigrants have increased slightly, while ambivalent ones have tended to decline.”

Ray Marshall, the former Cabinet secretary and economist, sides with Arango in cautioning that nations adopting a hard line on immigration do so at their own risk.

“Countries that suppress immigration will pay a price for it,” Marshall says. He cited the adverse impact that a relatively low rate of migration has had on the Japanese economy.

Assimilation Is Key

Working out of a nondescript building on a busy boulevard running through a diverse St. Louis neighborhood, Anna Crosslin is perfectly positioned to demonstrate the economic power of migrant populations. The keys to economic opportunity, Crosslin says, are embedded in hard work, perseverance and the efforts of organizations such as the International Institute of St. Louis—the organization for which Crosslin serves as president and chief executive officer.

The institute each year provides multiple services to 7,000 refugees hailing from as many as 75 nations. The institute’s clients find their way to the American Midwest from Bhutan and Iraq, Cuba and Somalia, Myanmar and Ethiopia and nearly every point in between. They arrive in a city with a heritage of nurturing highly successful immigrant families.

The list of notables includes members of the beer-brewing Anheuser and Busch families as well as the baseball-playing youngsters raised by immigrant parents on the same street in the city’s Italian neighborhood, Joe Garagiola and Yogi Berra.

The St. Louis International Institute, part of a group of similar organizations across the United States, is committed to preserving the heritage of newly arrived refugees as it simultaneously offers an array of counseling services, English language classes and resettlement courses.

Assimilation is the goal. And economic stability is the means to get there.

“One of our objectives once they have a relationship with us is to move them into the mainstream,” explains Microenterprise Development Program Manager Diego Abente, a transplant from Washington, D.C. “We are the first step on the ladder.”

Economic development workshops are the rung that introduce newcomers to the language of U.S. finance. The institute’s courses run the gamut from basic housekeeping skills aimed at helping cash-starved refugees get a foothold to primers on cash flow, marketing and insurance. For those arriving with financial resources, there are classes in “owning and managing residential properties.”

“Everything is a training component for our clients to teach them what is necessary at every level,” Crosslin says. The institute especially promotes the values of entrepreneurship.

Supported by the United Way of Greater St. Louis, the institute in 2008 launched a “Peer Lending Circle” that parallels the micro-lending programs found in many developing countries. In St. Louis, the initiative provides qualified immigrant-entrepreneurs with $1,000 in interest-free capital to forge small businesses. Each loan must be paid off within 12 months. Abente reports the vast majority of clients retire loans far before the terms come due. A more advanced program, the International Institute Community Development Corporation, provides refugees with low-interest loans of up to $45,000.

The loans are by no means a primary funding source. In most cases, the money flowing through the institute supplements investments in a business made by families, friends and the entrepreneurs themselves. Over the long term, the loans provide newly arrived immigrants with a line of credit they can present to financial institutions once their businesses start to grow and prosper.

“These are people who have been in camps for years waiting to jump-start their lives,” Abente says. “They arrive with no credit, no collateral.”

Institute-inspired success stories can be found in the Sudanese refugee driving a taxi partially funded by a micro-loan, the St. Louis restaurants that have introduced ethnic fare to meat-and-potatoes Midwesterners and a collection of trucking companies, among the many businesses owned and operated by the 70,000 Bosnian refugees that descended on Greater St. Louis following the mid-1990s Balkan turmoil.

All told, the initiatives have helped create more than 500 immigrant-operated businesses in the St. Louis area. According to the International Institute, 70% of the refugees who take advantage of its training programs find employment within six months. And each time a refugee-owned business gains a niche, it further dispels the long-held notion that an immigrant workforce strips away jobs and cuts into the earning power of indigenous citizens.

The Stolen Jobs Myth

A study by Saint Louis University economist Jack Strauss further debunks the contention that immigrants impede employment growth among natural-born citizens in host countries.

Strauss compared income and employment data from more than 900 U.S. metropolitan statistical areas in determining that the addition of Latinos aged 20-24 to an urban economy in fact leads to a slight improvement (0.26%) in unemployment rates among African Americans in the 25-34 age group who reside in those communities. 

The report additionally concludes that African Americans working in cities that experience a 1% bump in Latino population can reasonably expect a 3% increase in their median and mean wages—with a corresponding drop in African-American poverty rates.

“Although a perceived ‘brown versus black’ conflict may exist, it is not based on economics,” Strauss writes in a piece posted by the Immigration Policy Center. “Rather, it stems from political competition for representation and, at times, misinformation.”

International Monetary Fund analyst Kenichi Ueda, who conducted additional research on the topic, also found a correlation between immigration and positive economic outcomes.

Ueda conducted his groundwork in New Zealand, a nation that in the 1990s saw 16% of its population leave the country as, coincidentally, an almost identical percentage of immigrants arrived to potentially fill their jobs.

“Free labor mobility does not adversely affect people,” Ueda concludes, noting that the New Zealanders “experienced significant income growth during the 1990s, which has exceeded the growth of per capita GDP and which has been comparable to that achieved by residents of the United States and the United Kingdom.”

Sumption, the Migration Policy Institute senior analyst, concurs. Immigration, she says, “doesn’t necessarily interrupt the underlying economics.” 

The question then turns to the future destinations of transient populations (China notwithstanding).

Circular Migration

Sumption asserts that parts of the world may see the Thomas Wolfe axiom turned on its head in a global economy poised to send significant numbers of skilled and educated workers home again.

Brazil could well be the country spurring the bulk of the discussion about “return migration” or “reverse diaspora.” Analytic data from the Brazilian Ministry of Justice has already begun to reflect a move in that direction, according to an account published last year by the Pulitzer Center on Crisis Reporting. 

Author Sara Miller Llana presented statistics reflecting a 50% increase in the number of “regularized foreigners” who returned to Brazil between 2010 and 2012. Sumption believes the bulk of the returnees will be professionals from the fields of science, technology, engineering and mathematics—the so-called STEM fields.

“Return immigrants integrate much easier,” Sumption says. “They are not immigrants, per se. There are no issues with language and citizenship.”

The analyst’s observations on return immigration parallel a second area of Migration Policy Institute research—that of circular migration—described in a 2008 position paper as a “continuing, long-term, and fluid pattern of international mobility of people among countries that occupy what is now increasingly recognized as a single economic space.”

In its study, a three-person MPI research team concluded that circular migration is not restricted to a single cohort but, rather, cuts across socioeconomic lines.

“De facto circular migration is the norm where national borders are open by agreement, as among the first 15 European Member States, among the Nordic states, or between Australia and New Zealand,” the researchers wrote. “It is also normal where governments do not heavily enforce borders, as in many parts of the developing world.”

The success of circular migration demands a minimal level of reciprocity. A report by the Organization for Economic Cooperation and Development indicates nations around the globe are moving in that direction. According to the OECD, 179 countries are currently enjoined by the Bilateral Labour Agreements that encourage open immigration—a number the Migration Policy Institute says reflects the sharp growth in bilateral accords approved during the 1990s. The agreements, the OECD explains, “promote the development (of) human capital through the acquisition of occupational skills.”

MPI offers Hong Kong and Canada as an example of national cooperation on immigration. The institute estimates that 150,000 to a half-million Hong Kong residents carry a Canadian passport “and many move back and forth between the two” nations.

Skilled and professional employees, according to the MPI report, “appreciate the dynamic business environment and opportunities for professional advancement in China, but they also value the security, quality of life, and superior education systems of Canada.”

The MPI research team concluded that circular migration can benefit “low- and semi-skilled” migrant workers with the caveat that non-seasonal employment can present “more challenges to the participating employers and migrants, as well as to governments.”

At the same time, MPI envisions continuing profits for thousands of bilateral seasonal employees holding jobs in construction, tourism, agriculture and other seasonal vocations.

Making Migration Work

As an example, the institute singles out the Canadian Seasonal Agriculture Workers Program, a cooperative that guarantees immigrants from Mexico, Central America and the Caribbean annual employment.

The terms of the program stipulate that employers provide transportation to and from an employee’s home country, provide the migrant worker with the prevailing Canadian wage, food, housing and enrollment in the provincial health plan.

The workers are in turn recruited and screened by their home country—although MPI notes that some observers have questioned the host country’s ability to do so effectively.
Experts and MPI praise the program for meeting labor demand while allowing laborers to avoid the perils of illegal immigration.

“This point cannot be underestimated since, unlike undocumented workers who depend on smugglers, participants in the program incur reduced traveling and overall living expenses, experience increased productivity and derive greater benefits from their work,” sociologist Gustavo Verduzco told MPI researchers.

Viewing it from a policy perspective, the OECD cautions that bilateral labor cooperation is at a formative stage and therefore represents a “very small share” of migratory flow. In that sense, the agreements “still have to prove their potential,” the OECD says. 

Still, Ray Marshall is encouraged by what he has seen so far. He says the global economy, a direct offshoot of bilateral agreements, deserves credit for creating cross-national opportunities for skilled and non-skilled workers alike.

“There’s now an open flow because of international corporations,” Marshall says.

The bulk of the credit, he says, goes to technological innovation that, as New York Times columnist Thomas Friedman put it, flattened the world. And as Marshall puts it, digital technology is the “oil that greases the flow.”

It all goes back to the bursting of the high-tech bubble—a financial disaster that hastened the advent of fiber optics. Coupled with the fall of the Iron Curtain, Marshall says, fiber optics helped “thrust China, India and Russia into the global market, doubling the size of the global labor market overnight. Well trained Chinese, Indian and Eastern European workers suddenly became competitive with educated workers in the U.S. earning 10 times the salary. And that led to outsourcing.”

That translates into a pool of potential employees that today stretches around a world. The pool follows the basic principles of migration—an economic push and pull—that Marshall believes will endure through the 21st century and maybe beyond.

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