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GLOBALIZATION COULD MAKE MIGRATION STEEP AND RELENTLESS

by Chakravarthi Raghavan


Geneva, 1 Mar 2000 -- Globalization policies that are enabling free movement across frontiers of products and capital, but not people, far from reducing international migration flows, will give rise to increased migration pressures in the years ahead, says the International Labour Organization in a new publication.

The book by Peter Stalker, 'Workers without Frontiers - The Impact of Globalization on International Migration', says the free movement of goods and capital between the rich and poor countries will not be large enough to offset the needs for employment in poorer countries.

Instead, the social disruption caused by the economic restructuring is likely to shake more people loose from their communities and encourage them to look abroad for work.

The total number of migrants around the world now surpass 120 million -up from the 75 million of 1965, and continues to grow.

While economic development in poorer countries may eventually blunt the incentive to emigrate, that development could take some time. "Only when development has been under way for some time will people have faith that staying at home is the better long-term solution."

The prime reason for people now emigrating is to find good jobs and earn more pay: undocumented Mexicans in the US earned on average $31 a week in their last Mexican job, compared to $278 a week in the US; Indonesian labourers earned $0.28 a day in their country versus $2 more a day in neighbouring Malaysia; and, hourly labour costs in manufacturing stood at $0.25 in India and China, $0.46 in Thailand, $0.60 in Russia, $1.7 in Hungary, $2.09 in Poland as against $13.77 in UK, $14.40 in Australia, $16.03 in Canada, $17.20 in the US, $19.34 in France, $23.66 in Japan and $31.88 in Germany, according to a study cited by the author.

Says, the ILO Director of Employment Strategy Department, Werner Sengenberger, in a foreword: "The book is disturbing in its conclusion that the evidence so far available on the impact of globalization points to a likely worsening of migration pressures in many parts of the world... processes integration to globalization have intensified the disruptive effects of modernization and capitalist development."

And while this has been different from country to country, "the general effect has been a crisis of economic insecurity."

Addressing the recent UNCTAD-10 in Bangkok, ILO Director-General Juan Somavia had distinguished between globalization in terms of changes in technology and communication which could not be reversed, and the policies of globalization which were policies and instruments of governments that could be changed or reversed.

"Globalization," he noted, "had not only increased insecurity among the marginalised and unemployed, but had affected every section of society, including the employed middle-classes, who did not know what would happen to them in the future or the outlook for their children."

Somavia made a powerful plea for governmental policies and actions to bring about coherence of national and international policies so as to deal with this explosive social situation, but stopped short of proposing specific solutions.

Says Peter Stalker in the book: "Such is the preoccupation with globalization that, whether welcomed or feared, it is being accepted as something new and startling, and out of human control."

"This is far from true," he says. "In many respects what we are currently going through is merely the latest, and not necessarily the most dramatic, phase of a century-long process.

"Far from being remote and unmanageable, it is actually the outcome of deliberate choice. This is not to deny the significance of what is happening to the global economy, but it is important to be realistic about the scale and character of the change."

Between 1995 and 2025, the labour force in low-income countries is set to grow from 1.4 billion to 2.2 billion - and neither trade nor investment at their current levels, will be at a sufficient level to absorb this labour force.

And while globalization may help indirectly - by exposing poorer economies to competition, spurring productivity and generally stimulating economies to grow more rapidly - in terms of direct impact, neither trade nor investment is a sufficient answer, says Stalker.

There are also serious problems of distribution. If globalization is to have a greater impact on immigration, it will have to proceed in a more even and egalitarian fashion.

So far it has been lop-sided, with the greatest benefits going to those already ahead in the race. Many poor countries have so far seen very little of the expansion in world trade. The LDCs, with 10 percent of world population have only 0.3 percent of world trade - and that is half of the proportion of two decades ago.

There are also similar imbalances in flows of foreign direct investment, further skewing up international incomes. While global per capita incomes tripled over 1960-1994, there was are now over a hundred countries with per capita incomes lower than in the 1980s, and in some cases lower than in 1970s or 1960s.

"Globalization," warns author Stalker, "may in the end not flatten international disparities but merely re-sort countries into new categories of rich and poor. Sub-Saharan African countries, for example, have yet to feature very strongly on international migration trails. But the exodus towards South Africa, and flow of Africans moving through the fairly relaxed border controls of eastern Europe, could be a harbinger of things to come."

And even if globalization does make some countries as a whole richer, it could heighten internal disparities. India and China, which between them have the majority of the world poor population, may become much more integrated into the global economy. "This could still leave vast numbers of their people marginalized - but with sufficient resources to travel overseas in search of work."

There was also the question of time. Even under the most optimistic assumptions, there is little doubt that as development proceeds, migration pressures will rise in the decades ahead.

"This may be a temporary hump - as history would suggest. But there is no guarantee that history will repeat itself, and posterity may have other ideas.

"The poorest developing countries are trying to industrialize in a fiercely competitive environment. In a world of winners and losers, the losers don't simply disappear; they seek somewhere else to go.

"What could be a temporary hump could develop instead into a steep and relentless ascent."

Like many others, including some economic historians, Stalker puts the current phase of globalization in perspective, and notes that whether judged in terms of the trade, capital flows and openness of economies, or convergence of short-term interest rates, or even the extent of transnational securities trading, "the world in the 19th century was more globalized than now."

Economies are not dramatically more open nowadays than previously.

Throughout history, the commercial aspects of globalization have been intimately connected with the rise, and fall, of the nation-state. Initially the emergence of the nation-state relied very much on modern media and uniform systems of education that helped create and sustain national identity and state power. Now, however, it seems that "this modern era of globalization is eroding the authority of the state and the significance of national borders."

While the retreat of the state has opened up much more room for private enterprise at national and international levels, had has been accelerated by the collapse of communism, in practice most governments are moving roughly in the same direction, and deliberately choosing to reduce their own significance.

"This has profound implications for global governance and regulation, since at present the global institutions that might taken over some of the functions ceded by national governments remain relatively weak."

Globalization is not a monolithic, unstoppable juggernaut, but a complex web of inter-related processes - some of which are subject to greater control than others. "Of these, international migration is the one most likely to provoke intervention. Governments are less willing nowadays to block flows of trade or finance, but take much more resolution action when it comes to people."

According to the factor prize equalization theories of neo-classical economics, goods, people and capital moving across national frontiers should tend to equalize prices, and eventually some kind of equilibrium would be reached when the wage gaps between countries would represent just the cost of migration between countries.

In the earlier era of globalization (1870-1913), there was some convergence, and the main factors were trade and migration. According to a study by J.Williamson (1995), around 70% of the wage convergence between 1870 and 1910 was due to mass migration, and only the balance due to factors like trade. In the past, flows of people did help economies move closer together. But in recent times, political resistance to migration has stifled this convergence.

And in this new age of migration, the potential for migration arises from the difference in wage rates in occupations that are open to immigration, says Stalker, citing wage rate differentials between Mexico and the US, Poland and Germany, and Indonesia and Malaysia.

On the effects of trade on immigrant employment in industrial countries, Stalker cites evidence to show that in the US immigrants are more exposed to foreign competition than nationals, and black and female members of the work force even more disproportionately. Some industries like the garment industry are overwhelmingly dependent on immigrants, particularly Mexican, and they are over-represented in industries at greatest risk of import penetration.

There is similar evidence about France in Europe, but less conclusive about Spain.

And many of the industries that demand protection from foreign competition are those that employ large numbers of immigrants. In agriculture, there is some evidence (from Mexico-US experience) that agriculture trade may substitute for migration.

On the effects of free trade on emigration, Stalker notes that free trade would cost developing countries jobs in local industries that could not compete, and could lead to greater unemployment.

In Mexico, for example, 500 engineering firms in Mexico city went bankrupt, after Mexico joined GATT and brought tariffs down. While the job losses were serious, it involved skilled workers, who should readily find work elsewhere. But the situation in agriculture could be quite different, more so because the agricultural exports from the US and EU are subsidised and dumped. And even after the Uruguay Round, "dumping in agriculture is regarded as a legitimate trade practice," Stalker comments.

In the Philippines, for e.g., where quotas for food imports are being replaced by tariffs and cut, imports from the US will be available at 30% below the current domestic price, and by 2004, the gap would have widened to 39 percent. According to Oxfam, the withdrawal of import protection in the Philippines would put in jeopardy livelihoods of half a million households or 2.5 million people.

In Mexico, prospects for small farmers growing maize are equally gloomy. Even when subsidized, Mexican peasant farmers were poverty-stricken. But as a result of NAFTA, Mexico would have to dismantle subsidies and move to international prices. And the Mexican farmer has to struggle against US agricultural products which are subsidized. Some 800,000 Mexican farmers and workers will leave the rural sector, of whom 600,000 will migrate to the US.

In the long-term there may be some employment gains from free trade, but in the short-term increasing exports from the industrial world, particularly agriculture, it would cause unemployment in the developing world and would stimulate emigration.

"If trade were freed up more slowly, this might reduce the disruption in pooorer countries, while still achieving the long-term benefits."

Does moving capital, rather than workers, benefit? And how much does Foreign Direct Investment (FDI) contribute to capital, technological development, human resource development and trade?

While FDI could contribute to growth, on the whole it follows growth rather than lead it. And historical experience and evidence suggests that FDI goes, not to countries with the highest potential for out-migration, but rather to net immigration countries. For e.g., Bangladesh, Pakistan and the Philippines have not been popular destinations for FDI.

As for technological development, TNCs don't transfer much of their research and development functions to foreign affiliates, and this is true even of investment in industrial countries, says Stalker.

In the case of migrant-sending developing countries, the technology transfer has been considerably less. And the later developing countries are probably going to lose out in the technology stakes. A study by the International Financial Corporation shows that the pace of product and process technologies make it less likely nowadays for more sophisticated production to be transferred to developing countries.

The direct employment effects of TNCs is small. In 1993, the total employment by TNCs was only 73 million or 2-3 percent of the total work force. Nor are TNCs expanding employment rapidly. Though total FDI stock increased seven times between 1975 and 1993, their total employment did not even double.

There may be some indirect employment effect, through forward and backward linkages into the economy, and it is likely to be greater in some industries like automobiles than in others like textiles. ILO estimates that TNCs employ as many people indirectly as directly. But even then it would not amount to more than 5 percent, "a fairly modest contribution considering that they control over one-third of the world's productive assets.

The most direct connection between FDI and employment is in export processing zones (EPZs) of which in 1990 there were 230 in 70 developing countries and employing four million people - 45 percent of total TNC employment in the developing world. But not all EPZs are due to FDI, either. In China, which has the largest number of EPZ workers, working under sub-contract to firms in Hong Kong China, the latters change in status to that of a Special Administrative Region of China, means the majority of EPZs are now owned by "local" capital.

After China, the next biggest concentration of EPZs is in Mexico, where the maquiladora industries have proved remarkable attractive to FDI - in the beginning to the US FDI, but now to others too. But while maquiladoras provided fresh employment, they did little to employ the ex-bracero (seasonal farm workers migrating to the US). Braceros were mostly men, while maquiladoras employ women. Also, maquiladora employment has to be compared with the rest of Mexico's manufacturing industry - which has roughly the same output, but employs 2.9 million or four times as many.

The question whether international migration has an equilibrating effect, leading to convergence of wages, remains fairly open. In most sending countries, emigration is not likely to be on such a scale as to create labour shortages and drive up wages. And in labour receiving countries, this is a highly charged issue. But even here the evidence is not conclusive, and the effects if any are slight.

In any case, social and political objections to further immigration will arise long before it reaches a scale where it will have a major impact on labour markets.

Once set in motion, international migration develops a momentum of its own, and is supported by a complex web of networks - private, commercial and governmental. And the intensification of communications will promote further transnational communities providing their own networks. Also, migrant trafficking is now a multi-billion dollar organized industry.

Industrial countries too, because of demographic and other factors, including unwillingness of their nationals to take on some kinds of work, will have an irreducible requirements of immigrant labour in the years ahead.

"Indeed, if globalization expands the number of jobs at the bottom of the employment scale, particularly in services, it could well increase the demand for their labour. This prospect is not inevitable. Both states and enterprises could choose to improve salaries and working conditions to make certain jobs more attractive to national workers.

"But given the nervousness even about setting minimum wages, this seems unlikely to happen on any significant scale, leaving most industrial countries with an irreducible demand for some immigrant workers."

There was also an increasing demand for high-skilled professional workers, like computer-programmers. Each year tens of thousands of such workers are brought into the US by job-contracting firms, known as "body shops", which recruit foreign professionals and contract them out to US companies.

But critics point out that "these imported professionals are effectively indentured to their employers, as 'techno-braceros', the high-tech equivalent of migrant farm workers."

As globalization proceeds, the flow of professionals may not increase in volume, but would become ever more complex. At present there was relatively low resistance to these flows, since so far they have largely filled gaps at the top of the employment ladder. But with employment agencies developing cadres of mobile, educated, and skilled people that can be employed on short-term contracts, there could be a stronger response from local professionals who feel they are being undercut by cheap foreign-based workers. (SUNS4618)

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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