Are Trade & Development
Substitutions for Migration?
Theory & Case Studies
Theory vs. Reality
Classical and neoclassical theory
suggest that trade and migration are
substitutes.
Trade liberalization should result in a
decrease in migration.
This has not proven to be true,
especially in the short run.
The Migration Hump
In the short
run, increased
development
= increased
migration.
Migration In the long
run,
increased
development
deters
migration.
Development
Push Factors
Population surge in
Displacemen the cities
Trade t of farm
liberalization workers
may yield…
Unemployment
at home, better
Population opportunities and
More potential
growth wages abroad =
migrants
migration
Other Push & Pull Factors
Many argue that migration is primarily driven by
the pull-demand side. (Example: US & Mexico.)
Networking and family reunification drive chain
migration.
Superficial regional integration is unlikely to deter
migration; more complete integration (EU) will
deter migration beyond zone’s borders.
Other Push & Pull Factors
Development aid may also act as a push factor in
that it improves living standards and education.
If trade and migration are to be substitutes,
there must be an emphasis on job creation and
investment in human capital (that can be utilized
at home).
Case Studies
Volger & Rotte: Factors influencing
immigration to Germany.
Farsakh: Euro-Med Partnership’s
potential effect on North African labor
flows.
Jones: Maquiladoras’ effect on
reduction of Mexican emigration.
Volger & Rotte:
1% rise in the wage differential yields 1.6%
increase in migration.
1% rise in GDP yields 1.2% reduction in migration.
1% rise in urban population yields 2.7% increase
in migration.
Negative political situation spurs migration.
Farsakh
EU-Mediterranean Partnership = trade liberalization
and assistance to North Africa.
Some migration benefits the EU .
North Africa: high unemployment, falling wages.
Liberalization = rural exodus and damaged agriculture
and industry in North Africa.
Networks and demand growth will perpetuate
migration despite partnership.
Jones
Maquiladora: foreign-owned manufacturing
plant producing for export under
arrangements with Mexican government.
When located in traditional high-emigration
municipios, maquiladoras discourage
migration.
Approximately 3 migrants give up U.S.
migration for each 10 additional local persons
employed at the maquiladora.
Bottom Line
“Starting with very low income levels in the
Third World, dissolving financial restrictions,
population growth, societal change, improved
communications and expanding networks
lead to increased migration to the
industrialized countries in the short and
medium run. In the long run, potential
convergence of incomes and home
preferences cause migratory movements to
fall” (Volger, 507).