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How Talent Migration Facilitates the Diffusion of Globalization

• March 19, 2014 • 1:16 PM

(Photo: Toria/Shutterstock)

Openness to immigration behaves in the same way as openness to trade.

Globalization is dependent on migration, more so after the financial crisis than before. I studied globalization in graduate school during the late 1990s. We discussed how globalization impacted migration, not the other way around. “The Effect of Trade and Migration on Income“:

In this paper we re-examine the relationship between economic openness and economic development, emphasizing a different dimension of openness. During the last century (especially before World War I and again since the 1980’s), a crucial aspect of openness has operated through international migration flows. This channel remained neglected in the literature because of the limited size of migration flows during the 1930-1970 period. However, migration flows have played a key role in the historical and economic development of many countries,particularly those in the New World. Migrants brought ideas, skills, and labor, providing an important channel for the international diffusion of knowledge. As recently emphasized by Putterman and Weil (2010) these migration flows have had extremely persistent effects.

Emphasis added. When the period of limited migration flows ended, the world underwent a dramatic transformation. The typical migrant flipped from poorest and least educated to wealthiest and most educated. However, did globalization cause migration patterns to change or did shifting migration patterns spur globalization? The above paper gets at this chicken-or-egg problem, establishing that openness to immigration behaves in the same way as openness to trade. Openness to trade is conventional wisdom for the spread of globalization. Now add to that openness to immigration.

How does international migration act as an agent of globalization? This is one of my primary research questions for understanding the relationship between Rust Belt cities and globalization. I hypothesize that return migrants from global cities such as New York are globalizing neighborhoods in Cleveland and Pittsburgh. These neighborhoods are the engines of economic development for an entire region.

While thinking about yesterday’s post, I realized I was trying to channel Robert Guest’s book, Borderless Economics. Guest, through storytelling, describes how migration begets globalization. So you don’t have to read the book, he sums up his argument nicely in this Foreign Policy article titled “In Praise of Brain Drain“:

Diaspora networks have been around for centuries, but they have grown much more powerful of late, for three reasons. First, they are bigger than ever before. Seventy million Chinese live outside mainland China, and 22 million Indians live outside India. There are also hundreds of smaller networks, from the Lebanese in West Africa to the South Koreans in the United States. All told, there are 215 million first-generation migrants in the world, an increase of 40 percent since 1990. …

… Third, the places from which migrants come, such as India, China, and Africa, are much more open to trade than they were a generation ago. When China was a closed society, overseas Chinese traders had to make do with linking one foreign port with another. Now they link the world to China and China to the world.

These merchants speak the language, understand the culture, and know whom to trust. In countries where the rule of law is unreliable — which includes most fast-growing emerging markets — this matters. Some 70 percent of foreign direct investment into mainland China passes through the Chinese diaspora, broadly defined. American firms that hire Chinese-Americans find it easier to do business in China without the aid of a joint venture.

I picked out the passage that best links yesterday’s half-baked attempt to show how globalization has changed to the agency of migration (subject of today’s post). Speaking the language, understanding the culture, and knowing whom to trust are necessary for the diffusion of globalization. No matter where in the world you are, global neighborhoods look similar. Urban gentrification attracts the same kind of backlash in Germany and India. Migrants make it so.

Jim Russell

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