Monday, June 8, 2009

WSJ: Global Migration Reverses for First Time Since Great Depression

An interesting situation has developed across the globe, which has mirrored the retardation of migration within our own country. [Apr 23, 2009: As More Homes Fall Underwater Trapped Americans Cannot Migrate] The global situation has nothing to do with people sitting in underwater homes, but simply a global retrenchment in prosperity.

  • The developed world, which for decades has offered a difficult but promising path to upward mobility, appears to be losing its allure. Unemployment is rising, and backlashes against foreign workers are mounting.
  • The result is potentially the biggest turnaround in migration flows since the Great Depression, economists say.
  • Full migration numbers for most countries are only available after a long lag, and so don't yet capture all the effects of today's economic crisis. But anecdotal reports and data from government ministries and outside organizations indicate that the flow of immigrants from poor to wealthier countries is slowing significantly for the first time in decades while more people are returning home.
  • Among the returnees: road builders from Bangladesh, domestic servants from the Philippines, factory workers from Indonesia and Vietnam, construction workers from Mexico, as well as bankers, lawyers and real-estate professionals from around the world who were working in Singapore and Dubai.
  • Emigration from Mexico to the U.S. dropped 13% in the first quarter of this year compared to the same period last year, with more Mexicans leaving the U.S. than coming in. Indonesian authorities expect 60,000 or more citizens to be sent home from Malaysia, South Korea and other wealthy neighbors this year, as immigrant workers lose their jobs. Tens of thousands of Indians are washing their hands of Dubai as jobs there dry up and work permits expire. And in the U.K., the number of registered workers coming from new European Union member nations like Poland and the Czech Republic dropped 55% in the first quarter of 2009 compared to the same quarter a year earlier.
  • Dilip Ratha, an economist and migration expert at the World Bank in Washington, D.C., .... calls this reverse migration "very new" and "unprecedented."
  • Such migratory shifts could have profound consequences for developed nations, especially in places where domestic populations aren't growing fast enough to fill jobs or pay for social needs. High-skill immigrants are an important source of tax revenue in some cities, and their kids fill the classrooms of universities and private schools. In the developing world, remittances sent home by migrant workers are also slowing, meaning less income -- and potentially, less growth.
  • Migration levels soared through the end of the 20th century and into the early years of this decade, as rapid economic growth led to rising demand for foreign workers. The U.S., U.K. and Canada once again became big receivers of foreigners, as did the U.A.E. and other newly wealthy countries. The percentage of immigrants in America's labor force rose to nearly 16% in 2007, from about 9% in 1990, according to Mr. Wadhwa.
  • In the U.S., long a lure for Latin American immigrants, the number of undocumented workers from the region appears to have peaked, and may now be falling, according to a recent study by the Pew Hispanic Center. The population of South Americans, for example, has declined by as much as 400,000 from a peak of about three million in 2006, says Pew demographer Jeffrey Passel. Much of the declines are among high-skilled workers from Colombia, where the security situation has improved, and Brazil, whose economy has seen huge growth in recent years.
  • "What we're seeing is the normal outflow" of migrants leaving the U.S. to go back home, and "a huge drop-off in the inflow" coming into the U.S., says Mr. Passel.
  • Singapore's push to attract immigrants has had as much to do with a construction boom as with a bid to add vigor to a slow-growing population. More than 75% of Singapore's population increase between 2003 and 2008 was attributable to foreigners, including many high-skilled workers attracted by the country's booming economy and low taxes, according to Credit Suisse. But with job opportunities dwindling, as many as 200,000 foreigners may leave Singapore this year and next, Credit Suisse said recently. If that happens, it could have far-reaching implications for the local economy, including a drop in property prices. Enrollment in local international schools has already started to dip, according to local media reports.
Some countries are literally offering incentives for people to "go home" ... I've read of a few programs specific to Japan
  • The migratory shifts are likely to continue as governments increase visa restrictions or otherwise make it harder for immigrants to enter and stay. Spain and Japan have offered cash incentives for immigrants to go home. Australia recently announced that it intends to cut its intake of skilled migrants this year by 14%. Malaysia has frozen work permits for foreign workers in some sectors of the economy and is asking employers to lay off foreigners before they lay off native-born residents.

But is it temporary or long lasting?
  • Some analysts question whether the latest migration reversal will outlast the current recession, or turn out to be as big as migration experts predict. Many immigrants have worked hard to establish themselves in their adopted countries and will be unwilling to leave, even if jobs disappear. Others say the trend could be more long-lasting, especially if returning workers help give developing economies a boost or if rich-world economies take many years to recover.
Implications for the globe if it is more lasting?
  • The shift in migration poses a new challenge to the promise of globalization. Many economists and policymakers have long argued that widespread labor movement is a win-win because it boosts opportunities for people from poor countries while giving rich-world employers more options for labor, allowing them to increase efficiency and keep costs low. That, in turn, can keep inflation in check and contribute to higher standards of living. Many economists still believe that, but it's becoming harder to make their case as unemployment surges, income gaps widen and home-grown workers increasingly view foreigners as competitors for scarce jobs.
  • Many countries, including Mexico, the Philippines and Vietnam, rely heavily on money sent home from overseas workers. Such remittances are expected to decline by up to 8% this year, according to the World Bank, after rising to $305 billion in 2008, more than double the level of 2002.
  • Rich countries could feel a pinch, too. Immigrants make up a significant portion of the home-buying market in communities from Sydney, Australia to Phoenix, Ariz. The loss of foreign workers could lead to inflation when economies recover and some employers are forced to raise wages to attract native-born labor.
  • .... immigrant inventors contributed a quarter of global patent applications from the U.S. in 2006, while 52% of all Silicon Valley start-ups between 1995 and 2005 were started by immigrants.
  • In the past, "when you came to the United States, you came on a one-way ticket on the Mayflower or Air India," says Vivek Wadhwa, a senior research associate at Harvard who recently completed a study on migration trends. "But now, there are many lands of opportunity."

  • found that among Chinese nationals who emigrated to the U.S. and later returned home, 72% said they thought professional opportunities were better in their own country. Among Indians who returned home, 56% said so. (that's remarkable data that should open the eyes of all those chanting dogma)

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