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Few phenomena have shaped human history as decisively as migration. Its influence is evident in our vibrant, multi-ethnic societies. It is an ever-present reminder of the power of the human urge to seek a better life elsewhere. Immigration brings new ideas, new energy, new connections that are reflected in the people’s daily lives in thousands of ways. People eat Italian pizzas, Indian curries and Japanese sushi. They shop in late-night corner stores run by hard-working immigrants, and many of them work for or interact daily with businesses created by migrants of great vision and energy.
But migration brings challenges too. In many societies, not all newcomers have managed to integrate successfully. Children may struggle in school, parents may not find work or may do jobs that do not make best use of their skills, and whole families and communities may live on the edge of the social mainstream. With recession gripping on the world economy, these problems are likely only to grow. Immigrants are at particular risk of losing their jobs during downturns and, even when economies do recover, their job prospects tend to be worse than those of the natives.
To speak the truth, this time is not a good time to be foreign. Anti-immigrant parties are gaining ground in Europe. Britain has been fretting over lapses in its border controls. In America many seriously accused President Barack Obama as he has failed to deliver the immigration reforms he promised and Mitt Romney, the Republican presidential candidate would rather electrify the border fence with Mexico than educate the children of illegal aliens. Here is the funny part. America educates foreign scientists in its universities and then expels them, a policy the mayor of New York calls “national suicide”. Actually, this illiberal turn in attitudes to migration is no surprise. It is the result of a cyclical economic gloom combined with a secular rise in pressure on rich countries’ borders. However governments are now trying to decide if they should slam the door and consider another factor. The crucial push factor for this is the growing economic importance of Diasporas, and the contribution they can make to a country’s economic growth.
In this regard, one of the most important issues is the old networks and new communications of the Diasporas. Diaspora networks of any kind and roots have always been a potent economic force. But the cheapness and ease of modern travel has made theam larger and more numerous than ever before. A recent OECD report on world migration revealed that, there are now 215m first-generation migrants around the world. This constitutes three percent of the world’s population. If they were a nation, it would be a little larger than Brazil.
According to the report, there are more Chinese people living outside China than there are French people in France. Some 22 million Indians are scattered all over the globe. Small concentrations of ethnic and linguistic groups have always been found in surprising places such as Lebanese in West Africa, Japanese in Brazil and Welsh in Patagonia. But they have been joined by newer ones, such as West Africans in southern China.
These networks of kinship and language make it easier to do business across borders. They speed the flow of information. For example, a Chinese trader in Indonesia who spots a gap in the market for cheap umbrellas will alert his country man somewhere in China who knows someone who runs an umbrella factory. Kinship ties foster trust, so they can seal the deal and get the umbrellas to Jakarta before the rainy season ends. Trust matters, especially in emerging markets where the rule of law is weak. So does knowledge of the local culture. That is why so much foreign direct investment in China still passes through the Chinese Diaspora. And modern communications make these networks an even more powerful tool of business.
Diasporas also help spread ideas. Many of the emerging world’s brightest minds are educated at Western Universities. An increasing number go home, taking with them both knowledge and contacts. It is widely known that Indian computer scientists in Bangalore bounce ideas constantly off their Indian friends who are working in America’s Silicon Valley. Similarly, China’s technology industry is dominated by “sea turtles”- Chinese who have lived abroad and returned.
Diasporas spread money too. Migrants into rich countries not only send cash to their families; they also help companies in their host country operate in their home country. A Harvard Business School study shows that American companies that employ lots of ethnic Chinese people find it much easier to set up in China without a joint venture with a local firm.
Such arguments are unlikely to make much headway against hostility towards immigrants in rich countries particularly in Europe. Fury against foreigners is usually based on two mutually incompatible notions. First because so many migrants claim welfare they are a drain on the public purse. Second because they are prepared to work harder for less pay they will depress the wages of those at the bottom of the pile.
The first is usually not true. As different official government records revealed, in Britain, for instance, immigrants claim benefits less than indigenous people do. The second is hard to establish either way. Some studies do indeed suggest that competition from unskilled immigrants depresses the wages of unskilled locals. But others find this effect to be small or non-existent. Nor is it possible to establish the impact of migration on overall growth. The sums are simply too difficult. Yet there are good reasons for believing that it is likely to be positive.
It is true that migrants tend to be hard-working and innovative. That spurs productivity and company formation. A recent study carried out by Duke University showed that, while immigrants make up an eighth of America’s population, they founded a quarter of the country’s technology and engineering firms. And, by linking the West with emerging markets, Diasporas help rich countries to plug into fast-growing economies.
In the final analysis, rich countries are thus likely to benefit from looser immigration policy. The fear that poor countries will suffer as a result of a “brain drain” are overblown. The prospect of working abroad spurs more people to acquire valuable skills, and not all subsequently emigrate. Skilled migrants send money home, and they often return to set up new businesses. One study found that unless they lose more than 20pct of their university graduates, the brain drain makes poor countries richer.
Government as well as business gains from the spread of ideas through Diasporas. In this regard, India is a case in point. Foreign-educated Indians, including the Prime Minister, Manmohan Singh who is a graduate of Oxford and Cambridge Universities and his sidekick Montek Ahluwalia who is also a graduate of Oxford University, played a big role in bringing economic reform to India in the early 1990s.
Some 500,000 Chinese people have studied abroad and returned, mostly in the past decade. They dominate the think-tanks that advise the government, and are moving up the ranks of the Communist Party. Cheng Li of the Brookings Institution, an American think-tank, predicts that they will be 15-17pct of the party’s Central Committee by next year, up from 6pct in 2002. Few sea turtles call openly for democracy. But they have seen how it works in practice, and they know that many countries that practice it are richer, cleaner and more stable than China.
Many prominent economists explained that, as for the old world, its desire to close its borders is understandable but dangerous. Migration brings youth to ageing countries, and allows ideas to circulate in millions of mobile minds. That is good both for those who arrive with suitcases and dreams and for those who should welcome them. The notion of a win-win situation will not have a better explanation other than this.