-
Title
-
Migration and Globalization
-
Author
-
Peters, Margaret E.
-
Research Area
-
Social Processes
-
Topic
-
Globalization
-
Abstract
-
Scholarship on globalization since the 1970s has focused on the increasing integration of world markets for goods, services, and capital. International migration, by comparison, has received relatively little attention. As recent scholarship has shown, the absence of migration from studies on globalization has made our understanding of other aspects of globalization incomplete. Immigration policy interacts with trade and capital policy. All three policies affect firms' production strategies and their support for openness in the other policy areas. Migration, trade, and capital flows also interact. For instance, increased migration can increase trade and investment as well as help states maintain fixed exchange rates. This entry discusses these effects in greater detail and discusses paths for future research.
-
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-
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-
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-
Global Income Inequality (Sociology), Glenn Firebaugh
-
Migrant Networks (Sociology), Filiz Garip and Asad L. Asad
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-
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Identifier
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etrds0221
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extracted text
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Migration and Globalization
MARGARET E. PETERS
Abstract
Scholarship on globalization since the 1970s has focused on the increasing integration of world markets for goods, services, and capital. International migration, by
comparison, has received relatively little attention. As recent scholarship has shown,
the absence of migration from studies on globalization has made our understanding of other aspects of globalization incomplete. Immigration policy interacts with
trade and capital policy. All three policies affect firms’ production strategies and their
support for openness in the other policy areas. Migration, trade, and capital flows
also interact. For instance, increased migration can increase trade and investment as
well as help states maintain fixed exchange rates. This entry discusses these effects
in greater detail and discusses paths for future research.
INTRODUCTION
Recent scholarship on globalization has focused on the increasing integration
of world markets for goods, services, and capital. In contrast, international
migration has received far less attention by international relations scholars.
This is likely because the flow of people has not kept pace with the flow of
goods and services across border, in large part due to more restrictive policies, and further, policymakers have tended to frame migration policy as
domestic policy.
Migration, along with trade and capital flows, was a hallmark of the
nineteenth century era of globalization. As Keynes famously reflected in The
Economic Consequences of the Peace:
The inhabitant of London could order by telephone, sipping his morning tea
in bed, the various products of the whole earth, in such quantity as he might
see fit, and reasonably expect their early delivery upon his doorstep; he could
at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share,
without exertion or even trouble, in their prospective fruits and advantages;
or be could decide to couple the security of his fortunes with the good faith of
Emerging Trends in the Social and Behavioral Sciences. Edited by Robert Scott and Stephen Kosslyn.
© 2015 John Wiley & Sons, Inc. ISBN 978-1-118-90077-2.
1
2
EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES
the townspeople of any substantial municipality in any continent that fancy or
information might recommend. (Keynes, 1919, p. 11)
The Great War and then the Great Depression ended this era. New restrictions on immigration restrictions were coupled with tightened capital controls and heightened tariffs. These actions put a halt to the movement of
people, money, and goods.
In the wake of World War II, policymakers, especially those in the
United States, sought to reopen world markets for goods and capital.
These efforts were bolstered as the Communist threat took shape (Barton, Goldstein, Josling, & Steinberg, 2006; Hull, 1948; Ikenberry, 2001).
Believing that economic deglobalization had fomented military conflict,
they forged a patchwork of interlocking international regimes to govern
global security, trade, and finance. They hoped to secure the benefits of the
integration achieved in the nineteenth century without surrendering the
policy autonomy they had reclaimed in the interwar period. Yet, apart from
arrangements to accommodate refugees, provisions to govern international
economic migration were conspicuously absent. Left as a domestic policy,
international migration has been increasingly restricted at least since the
end of Bretton Woods. As a result, trade regained its pre-World War I levels
by the 1970s, and global financial flows regained their peak in the 1980s
(Obstfeld & Taylor, 2003), but migration flows still remain well below their
pre-World War I levels (United Nations Development Program, 2009).
Scholars studying migration have similarly conceptualized migration as
a domestic concern, focusing on four domestic-level variables to explain
changes in policy: the role of labor unions, who dislike that immigrants
compete with them for jobs; nativists who dislike immigration for cultural
reasons; tax payers, who dislike the burden that immigrants might place on
the social welfare system; and immigrants themselves, who seek to maintain
openness for their own security or to bring in friends and family. Recently,
however, there has been a new wave of interest in migration as scholars have
coupled these traditional perspectives with a new focus that examines how
immigration interacts with other aspects of globalization. Two lines of this
research are discussed as follows: first, the interaction of immigration policy
with trade and capital policy; and, second, the interaction of immigrant
flows with flows of goods and money.
FOUNDATIONAL RESEARCH
The foundational research for the study of migration as a component of
globalization comes from economics, particularly models of trade. The
Stolper–Samuelson model is the canonical model tying together trade,
Migration and Globalization
3
capital, and migration policy. The Stolper–Samuelson model of trade builds
on the Ricardian model of comparative advantage in which countries are
assumed to have different factor endowments. In the simple model, there
are two countries: one relatively abundant in labor and the other relatively
abundant in capital. Each country faces an incentive to specialize in production that utilizes its abundant factor most intensively. Each country then
engages in trade to enjoy the diversity of products. Within each country,
owners of the relatively scarce factor suffer a real decrease in the returns to
their factor (and thus their income) as the country specializes in production
that uses the abundant factor intensively. In contrast, owners of the abundant
factor will see a real increase in the returns to their factor. Similarly, opening
borders to the movement of labor or capital will lead to movements that
tend to equalize the distribution of these factors across countries. Movement
of factors, therefore, also increases the real returns to the abundant factor
while decreasing the real returns to the scarce factor. For countries looking
to open their economies, economic theory does not prioritize which factor
should be liberalized.
Furthermore, Mundell (1957) argues that closure to one of these flows may
stimulate the flow of the others. For example, if trade is closed but immigration is open, states with abundant capital will see an increase in immigration
as people move from states with abundant labor to those with scarce labor. In
contrast, if trade is open but immigration is closed, trade should increase as
the movement of goods essentially replaces the movement of people. From
this foundational research, it is clear that migration, trade, and capital movement are inextricably tied to one other and should be studied together.
Hatton and Williamson (1998, 2005) have led the charge in testing these
theories empirically. Specifically, they examine the trends in migration from
the nineteenth through the twenty-first centuries. They argue that migration
was an important part of globalization in the nineteenth century, contributing
to the convergence of wages between the higher wages of the New World
and the lower wages of Europe. Using econometric tests, they also show that
wages between the developed and developing world would converge faster
today if migration were more open.
RECENT RESEARCH
RESEARCH ON THE INTERACTION OF IMMIGRATION, TRADE, AND CAPITAL POLICY
Peters (2014, 2015) argues that trade and capital policy can affect on immigration policy. She argues that immigration policy, particularly with regard to
low-skill immigrants, is largely driven by a given country’s trade policy and
the ability of that country’s firms to move production overseas (henceforth,
4
EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES
firm mobility). Changes in trade policy and firm mobility affect the demand
for immigration by firms, changing political support for open immigration.
The Stolper–Samuelson theorem states that trade closure leads to an
increase in low-skill intensive production (and a concomitant increase in
wages) in states where low-skill labor is scarce. Without an increase in the
labor supply, any advantage that firms gain from trade protection may be
erased due to increasing wages. As a result, firms lobby for increased immigration when trade is restricted. As firms tend to be powerful, immigration
should be relatively open (Peters, 2014, 2015).
In contrast, liberalizing trade in such states leads to a decrease in low-skill,
labor-intensive production, reducing the need for labor and, in many cases,
forcing businesses to close. Businesses that close no longer lobby the policymaker. For those that remain open, the fall in wages reduces their incentives
lobby policymakers. Given the existence of groups who oppose immigration,
the policymaker will respond by restricting immigration (Peters, 2014, 2015).
Changes in capital mobility have a similar effect because it affects
firm mobility. When firms are immobile across borders, they are wholly
dependent on the domestic labor market. This increases their support
for immigration. When firms relocate abroad, they can take advantage of
foreign lower cost labor without migration. Once they “offshore,” they
have less incentive to care about immigration policy at home. This removes
potentially key support in favor of open immigration (Peters, 2014, 2015).
Finally, we can consider how trade and capital policy respond to immigration policy. Open immigration may increase support for open trade
as it increases the competitiveness of those firms that might otherwise be
threatened by trade. To maintain this support, however, immigration would
have to continue to open in proportion to increasing trade openness. But
this is likely unsustainable at high levels of trade openness because the level
of immigration necessary to sustain firms’ competitiveness would greatly
decrease wages, potentially increase fiscal costs, and likely lead to a nativist
backlash. Open immigration may also reduce pressure for open capital,
again, because firms would be more competitive at home. In contrast, a
restrictive immigration policy may make open trade harder to achieve, as
labor costs remain high, and may increase pressure for open capital so that
threaten firms can move overseas (Peters, 2014, 2015).
RESEARCH ON THE INTERACTION OF MIGRANT FLOWS WITH TRADE AND MONETARY FLOWS
AND POLICY
The second direction of research examines how migrant flows, and the remittances they engender, interact with other aspects of globalization. One line
of inquiry examines how migrants help bridge the informational gaps and
Migration and Globalization
5
transaction costs associated with international trade and international investment (e.g., Dunlevy, 2006; Felbermayr & Toubal, 2012; Gould, 1994; Hatzigeorgiou, 2010; Jacks, 2005; Leblang, 2010).
Migrants can facilitate trade and investment through several channels: they
often have valuable ties with their home country, including knowledge of
home country language, markets, preferences, and business contacts (Gould,
1994, p. 302; Leblang, 2010). Migrants sometimes relocate specifically to
develop trade or invest overseas. Migrants also create a market for goods
from their home country when they live abroad and, perhaps, a market
for goods from the foreign country when they return home. Similarly,
migrants often invest in their home country after moving. In addition,
migrants can help firms in the states that receive them trade and invest in
their home countries by providing language skills or making their language
more common. They might also bring knowledge of market opportunities
for trade or investment to firms. Migration may increase familiarity in
the receiving country about the type of work ethic, quality of labor, and
business culture that exist in the home country, increasing the desirability
of investment (Leblang, 2010, pp. 586–587). Finally, migrants may have
knowledge of arbitrage opportunities. In a recent US Supreme Court case,
for instance, a student from Thailand bought textbooks in the Thai market,
where the books are much cheaper and then resold them in the United States
at a considerable profit.
Migrants can also increase the trust necessary for cross-border exchange.
Trade and investment often involves contracts in which payment and delivery do not occur simultaneously. Migrants can mitigate the risk involved
in these contracts through their ties with specific trustworthy individuals
back home or in the receiving country. They might also reduce the perceived
risk by familiarizing citizens in the receiving country with the sending country more generally. These effects might be especially important for forms of
investment—like foreign direct investment or venture capital—that are more
risky (Leblang, 2010)1 or for trade with countries where corruption is thought
to be high (Dunlevy, 2006; Gould, 1994).
Migrants and the remittances they send home can also affect policies
regarding capital and exchange rates. As the Mundell–Fleming model
shows, states must choose two of the three following policies: stable
exchange rates, open capital markets, and macroeconomic policy autonomy.
Many developing countries today choose to fix their exchange rates to
increase their credibility. Fixed exchange rates lower transaction costs for
investors, traders, and other groups that interact with the global economy
1. Foreign direct investment and venture capital are more risky because the investment is sunk into a
company or physical plant that are hard to move out of a country in a time of crisis. To contrast, portfolio
investment—investments in stocks or bonds—can easily be sold in a time of crisis.
6
EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES
(Frieden, 1991). Fixed exchange rates are also a way to combat inflation: by
fixing the currency, the country imports the macroeconomic policy of the
country whose currency it ties itself to.
Fixing the exchange rate, however, is not without risks. Given the globalization of international capital, few states are able to maintain capital controls. In
essence, fixing the exchange rate becomes a choice to renounce using macroeconomic policy as a tool to combat recessions. Remittances from migrants
help solve this problem because they are countercyclical and act as a fiscal transfer (Singer, 2010). Remittances increase during recessions and can
help increase spending at a time when spending in the economy is otherwise
decreased. This spending then has a multiplier effect that helps stimulate the
economy (Singer, 2010, p. 313). Remittances, thus, reduce the (political) costs
of maintaining a fixed exchange rate and make it more likely that developing
states will adopt one (Singer, 2010).
DIRECTIONS FOR FUTURE RESEARCH
Current research suggests two lines for future inquiry. First, scholars should
examine how firms’ increasingly long supply chains affect migration. We
know from other economic research that increased trade, opportunities to
move production overseas, and technology have contributed to the decline
of manufacturing in many wealthy countries (Feenstra & Hanson, 1996;
Kremer, 2006). This manufacturing has often moved to developing countries. How will this move affect employment opportunities in developing
countries and how will that affect the desire for migration? How will these
multinational firms affect the politics of migration in developing countries?
Will they lobby of increased immigration or decreased emigration to keep
their wage bills low? How will governments respond?
A second line of inquiry is to further explore how migrants, as economic
and political agents, increase economic and cultural ties. Much of the current
research has determined a link between migration and trade or investment
but has not tested more fine-grained causal mechanisms about why migration has these effects. As such, there is much variation left to explain. For
example, are certain migrants or migrant networks more or less likely to
facilitate the integration of economies? If so, why? Do characteristics of the
sending or receiving affect this process?
In addition, we could examine whether migration fosters peace. Many
scholars have examined trade and investment as a source of the democratic
peace, but few have examined whether migration has a similar pacifying
effect through the increased understanding of different cultures that comes
with migration. Migrants may also pass norms and institutions from one
country to another. For example, do migrants who go to democracies
Migration and Globalization
7
spread democratic norms when they return home or are they disillusioned
by democracy? If there is variation in this effect, why does that variation
exist?
CONCLUSION
Scholarship on globalization has focused on the integration of world markets for goods, services, and capital. But because migration has been studied primarily as domestic policy, it has only recently been considered from
the perspective of globalization scholarship. Recent scholarship shows that
studying migration from this perspective enhances both our understanding of migration and of globalization more generally. Immigration policy is
affected by trade and capital policy and, as well, may affect those two policies. Furthermore, scholars have shown that increased migration can increase
trade and investment as well as help states maintain fixed exchange rates.
Going forward, scholars should continue to examine how migration interacts
with other aspects of globalization to create a more complete understanding
of how the world economy works today.
REFERENCES
Barton, J. H., Goldstein, J. L., Josling, T. E., & Steinberg, R. H. (2006). The evolution of
the trade regime: Politics, law, and economics of the GATT and the WTO. Princeton, NJ:
Princeton University Press.
Dunlevy, J. A. (2006). The influence of corruption and language on the protrade effect
of immigrants: Evidence from the American states. The Review of Economics and
Statistics, 88(1), 182–186.
Feenstra, R. C., & Hanson, G. H. (1996). Globalization, outsourcing, and wage
inequality. The American Economic Review, 86(2), 240–245.
Felbermayr, G. J., & Toubal, F. (2012). Revisiting the trade-migration nexus: Evidence
from new OECD data. World Development, 40(5), 928–937.
Frieden, J. (1991). Invested interests: The politics of national economic policies in a
world of global finance. International Organization, 45(4), 425–451.
Gould, D. M. (1994). Immigrant links to the home country: Empirical implications
for U.S. bilateral trade flows. The Review of Economics and Statistics, 76(2), 302–316.
Hatton, T. J., & Williamson, J. G. (1998). The age of mass migration: Causes and economic
impact. New York, NY: Oxford University Press.
Hatton, T. J., & Williamson, J. G. (2005). Global migration and the world economy. Cambridge, MA: The MIT Press.
Hatzigeorgiou, A. (2010). Migration as trade facilitation: Assessing the links between
international trade and migration. The B.E. Journal of Economic Analysis & Policy,
10(1), Article 24.
Hull, C. (1948). The memoirs of Cordell hull. New York, NY: Macmillan Co.
8
EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES
Ikenberry, G. J. (2001). After victory: Institutions, strategic restraint, and the rebuilding of
order after major wars. Princeton, NJ: Princeton University Press.
Jacks, D. S. (2005). Immigrant stocks and trade flows, 1870–1913. Journal of European
Economic History, 34(3), 625–649.
Keynes, J. M. (1919). The economic consequences of the peace. New York, NY: Harcourt,
Brace and Howe.
Kremer, M. (2006). Globalization of labor markets and inequality. In S. M. Collins &
C. Graham (Eds.), Brookings Trade Forum (pp. 211–228). Washington, DC: Brookings
Institution Press.
Leblang, D. A. (2010). Familiarity breeds investment: diaspora networks and international investment. American Political Science Review, 104, 584–600.
Mundell, R. A. (1957). International trade and factor mobility. American Economic
Review, 47(3), 321–335.
Obstfeld, M., & Taylor, A. M. (2003). Globalization and capital markets. In M. D.
Bordo, A. M. Taylor & J. G. Williamson (Eds.), Globalization in historical perspective
(pp. 121–187). Cambridge, MA: National Bureau of Economic Research.
Peters, M. E. (2014). Trade, Foreign Direct Investment and Immigration Policy Making in the US. International Organization, 68(4), 811–844.
Peters, M. E. (2015). Open trade, closed borders: Immigration policy in the era of
globalization. World Politics, 67(1).
Singer, D. A. (2010). Migrant remittances and exchange rate regimes in the developing world. American Political Science Review, 104(2), 307–323.
United Nations Development Program (2009). Human development report. New York,
NY: United Nations.
FURTHER READING
On Migration and Remittances
Brown, S. S. (2006). Can remittances spur development? A critical survey. International Studies Review, 8, 55–75.
Card, D. (2009). How immigration affects US cities. In R. Inman (Ed.), Making cities
work: Prospects and policies for urban America (pp. 158–200). Princeton, NJ: Princeton
University Press.
Fitzgerald, J., Leblang, D. A., & Teets, J. C. (2009). Defying the law of gravity: The political
economy of international migration. World Politics, 66(3), 406–445.
Hainmueller, J., & Hiscox, M. J. (2010). Attitudes toward highly skilled and
low-skilled immigration: Evidence from a survey experiment. American Political
Science Review, 1–24.
Hanson, G. H., Scheve, K., & Slaughter, M. J. (2007). Public finance and individual
preferences over globalization strategies. Economics & Politics, 19(1), 1–33.
Massey, D. S., Arango, J., Hugo, G., Kouaouci, A., Pellegrino, A., & Taylor, J. E. (1993).
Theories of international migration: A review and appraisal. Population and Development Review, 19(3), 431–466.
Migration and Globalization
9
On Migration and Globalization
Esteves, R., & Khoudour-Casteras, D. (2009). A fantastic rain of gold: European
migrants’ remittances and balance of payments adjustment during the gold standard period. The Journal of Economic History, 69(4), 951–985.
Markusen, J. R. (1983). Factor movements and commodity trade as complements.
Journal of International Economics, 14(3–4), 341–356.
O’Rourke, K. H., & Williamson, J. G. (1999). Globalization and history: The evolution of
a nineteenth-century Atlantic economy. Cambridge, MA: MIT Press.
MARGARET E. PETERS SHORT BIOGRAPHY
Margaret E. Peters is an Assistant Professor in the Department of Political Science at Yale University. Her work focuses on migration as part of
international political economy. Her book project focuses on the diversity
of immigration policies within labor scarce countries over the last two
centuries. She shows that immigration policy has been affected by prior
policy choices to open the economy to capital and/or trade. Other aspects
of her work examine public opinion on immigration and trade policy;
when states use treaties to regulate migration; how immigration policy
affects the integration of migrants; and the effect of remittances on support
for democratic governance. More about Professor Peters can be found at
http://margaretpeters.commons.yale.edu/.
RELATED ESSAYS
Mediation in International Conflicts (Political Science), Kyle Beardsley and
Nathan Danneman
Globalization Backlash (Sociology), Mabel Berezin
Globalization: Consequences for Work and Employment in Advanced
Capitalist Societies (Sociology), Tony Elger
Global Income Inequality (Sociology), Glenn Firebaugh
Migrant Networks (Sociology), Filiz Garip and Asad L. Asad
Immigration and the Changing Status of Asian Americans (Sociology),
Jennifer Lee
Visualizing Globalization (Sociology), Matthew C. Mahutga and Robert
Nash-Parker
Immigrant Health Paradox (Sociology), Kyriakos S. Markides and Sunshine
Rote
Politics of Immigration Policy (Political Science), Jeannette Money
Below-Replacement Fertility (Sociology), S. Philip Morgan
Cultural Conflict (Sociology), Ian Mullins
10
EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES
Organizations and the Production of Systemic Risk (Sociology), Charles
Perrow
Demography and Cultural Evolution (Anthropology), Stephen Shennan
Culture and Globalization (Sociology), Frederick F. Wherry
-
Migration and Globalization
MARGARET E. PETERS
Abstract
Scholarship on globalization since the 1970s has focused on the increasing integration of world markets for goods, services, and capital. International migration, by
comparison, has received relatively little attention. As recent scholarship has shown,
the absence of migration from studies on globalization has made our understanding of other aspects of globalization incomplete. Immigration policy interacts with
trade and capital policy. All three policies affect firms’ production strategies and their
support for openness in the other policy areas. Migration, trade, and capital flows
also interact. For instance, increased migration can increase trade and investment as
well as help states maintain fixed exchange rates. This entry discusses these effects
in greater detail and discusses paths for future research.
INTRODUCTION
Recent scholarship on globalization has focused on the increasing integration
of world markets for goods, services, and capital. In contrast, international
migration has received far less attention by international relations scholars.
This is likely because the flow of people has not kept pace with the flow of
goods and services across border, in large part due to more restrictive policies, and further, policymakers have tended to frame migration policy as
domestic policy.
Migration, along with trade and capital flows, was a hallmark of the
nineteenth century era of globalization. As Keynes famously reflected in The
Economic Consequences of the Peace:
The inhabitant of London could order by telephone, sipping his morning tea
in bed, the various products of the whole earth, in such quantity as he might
see fit, and reasonably expect their early delivery upon his doorstep; he could
at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share,
without exertion or even trouble, in their prospective fruits and advantages;
or be could decide to couple the security of his fortunes with the good faith of
Emerging Trends in the Social and Behavioral Sciences. Edited by Robert Scott and Stephen Kosslyn.
© 2015 John Wiley & Sons, Inc. ISBN 978-1-118-90077-2.
1
2
EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES
the townspeople of any substantial municipality in any continent that fancy or
information might recommend. (Keynes, 1919, p. 11)
The Great War and then the Great Depression ended this era. New restrictions on immigration restrictions were coupled with tightened capital controls and heightened tariffs. These actions put a halt to the movement of
people, money, and goods.
In the wake of World War II, policymakers, especially those in the
United States, sought to reopen world markets for goods and capital.
These efforts were bolstered as the Communist threat took shape (Barton, Goldstein, Josling, & Steinberg, 2006; Hull, 1948; Ikenberry, 2001).
Believing that economic deglobalization had fomented military conflict,
they forged a patchwork of interlocking international regimes to govern
global security, trade, and finance. They hoped to secure the benefits of the
integration achieved in the nineteenth century without surrendering the
policy autonomy they had reclaimed in the interwar period. Yet, apart from
arrangements to accommodate refugees, provisions to govern international
economic migration were conspicuously absent. Left as a domestic policy,
international migration has been increasingly restricted at least since the
end of Bretton Woods. As a result, trade regained its pre-World War I levels
by the 1970s, and global financial flows regained their peak in the 1980s
(Obstfeld & Taylor, 2003), but migration flows still remain well below their
pre-World War I levels (United Nations Development Program, 2009).
Scholars studying migration have similarly conceptualized migration as
a domestic concern, focusing on four domestic-level variables to explain
changes in policy: the role of labor unions, who dislike that immigrants
compete with them for jobs; nativists who dislike immigration for cultural
reasons; tax payers, who dislike the burden that immigrants might place on
the social welfare system; and immigrants themselves, who seek to maintain
openness for their own security or to bring in friends and family. Recently,
however, there has been a new wave of interest in migration as scholars have
coupled these traditional perspectives with a new focus that examines how
immigration interacts with other aspects of globalization. Two lines of this
research are discussed as follows: first, the interaction of immigration policy
with trade and capital policy; and, second, the interaction of immigrant
flows with flows of goods and money.
FOUNDATIONAL RESEARCH
The foundational research for the study of migration as a component of
globalization comes from economics, particularly models of trade. The
Stolper–Samuelson model is the canonical model tying together trade,
Migration and Globalization
3
capital, and migration policy. The Stolper–Samuelson model of trade builds
on the Ricardian model of comparative advantage in which countries are
assumed to have different factor endowments. In the simple model, there
are two countries: one relatively abundant in labor and the other relatively
abundant in capital. Each country faces an incentive to specialize in production that utilizes its abundant factor most intensively. Each country then
engages in trade to enjoy the diversity of products. Within each country,
owners of the relatively scarce factor suffer a real decrease in the returns to
their factor (and thus their income) as the country specializes in production
that uses the abundant factor intensively. In contrast, owners of the abundant
factor will see a real increase in the returns to their factor. Similarly, opening
borders to the movement of labor or capital will lead to movements that
tend to equalize the distribution of these factors across countries. Movement
of factors, therefore, also increases the real returns to the abundant factor
while decreasing the real returns to the scarce factor. For countries looking
to open their economies, economic theory does not prioritize which factor
should be liberalized.
Furthermore, Mundell (1957) argues that closure to one of these flows may
stimulate the flow of the others. For example, if trade is closed but immigration is open, states with abundant capital will see an increase in immigration
as people move from states with abundant labor to those with scarce labor. In
contrast, if trade is open but immigration is closed, trade should increase as
the movement of goods essentially replaces the movement of people. From
this foundational research, it is clear that migration, trade, and capital movement are inextricably tied to one other and should be studied together.
Hatton and Williamson (1998, 2005) have led the charge in testing these
theories empirically. Specifically, they examine the trends in migration from
the nineteenth through the twenty-first centuries. They argue that migration
was an important part of globalization in the nineteenth century, contributing
to the convergence of wages between the higher wages of the New World
and the lower wages of Europe. Using econometric tests, they also show that
wages between the developed and developing world would converge faster
today if migration were more open.
RECENT RESEARCH
RESEARCH ON THE INTERACTION OF IMMIGRATION, TRADE, AND CAPITAL POLICY
Peters (2014, 2015) argues that trade and capital policy can affect on immigration policy. She argues that immigration policy, particularly with regard to
low-skill immigrants, is largely driven by a given country’s trade policy and
the ability of that country’s firms to move production overseas (henceforth,
4
EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES
firm mobility). Changes in trade policy and firm mobility affect the demand
for immigration by firms, changing political support for open immigration.
The Stolper–Samuelson theorem states that trade closure leads to an
increase in low-skill intensive production (and a concomitant increase in
wages) in states where low-skill labor is scarce. Without an increase in the
labor supply, any advantage that firms gain from trade protection may be
erased due to increasing wages. As a result, firms lobby for increased immigration when trade is restricted. As firms tend to be powerful, immigration
should be relatively open (Peters, 2014, 2015).
In contrast, liberalizing trade in such states leads to a decrease in low-skill,
labor-intensive production, reducing the need for labor and, in many cases,
forcing businesses to close. Businesses that close no longer lobby the policymaker. For those that remain open, the fall in wages reduces their incentives
lobby policymakers. Given the existence of groups who oppose immigration,
the policymaker will respond by restricting immigration (Peters, 2014, 2015).
Changes in capital mobility have a similar effect because it affects
firm mobility. When firms are immobile across borders, they are wholly
dependent on the domestic labor market. This increases their support
for immigration. When firms relocate abroad, they can take advantage of
foreign lower cost labor without migration. Once they “offshore,” they
have less incentive to care about immigration policy at home. This removes
potentially key support in favor of open immigration (Peters, 2014, 2015).
Finally, we can consider how trade and capital policy respond to immigration policy. Open immigration may increase support for open trade
as it increases the competitiveness of those firms that might otherwise be
threatened by trade. To maintain this support, however, immigration would
have to continue to open in proportion to increasing trade openness. But
this is likely unsustainable at high levels of trade openness because the level
of immigration necessary to sustain firms’ competitiveness would greatly
decrease wages, potentially increase fiscal costs, and likely lead to a nativist
backlash. Open immigration may also reduce pressure for open capital,
again, because firms would be more competitive at home. In contrast, a
restrictive immigration policy may make open trade harder to achieve, as
labor costs remain high, and may increase pressure for open capital so that
threaten firms can move overseas (Peters, 2014, 2015).
RESEARCH ON THE INTERACTION OF MIGRANT FLOWS WITH TRADE AND MONETARY FLOWS
AND POLICY
The second direction of research examines how migrant flows, and the remittances they engender, interact with other aspects of globalization. One line
of inquiry examines how migrants help bridge the informational gaps and
Migration and Globalization
5
transaction costs associated with international trade and international investment (e.g., Dunlevy, 2006; Felbermayr & Toubal, 2012; Gould, 1994; Hatzigeorgiou, 2010; Jacks, 2005; Leblang, 2010).
Migrants can facilitate trade and investment through several channels: they
often have valuable ties with their home country, including knowledge of
home country language, markets, preferences, and business contacts (Gould,
1994, p. 302; Leblang, 2010). Migrants sometimes relocate specifically to
develop trade or invest overseas. Migrants also create a market for goods
from their home country when they live abroad and, perhaps, a market
for goods from the foreign country when they return home. Similarly,
migrants often invest in their home country after moving. In addition,
migrants can help firms in the states that receive them trade and invest in
their home countries by providing language skills or making their language
more common. They might also bring knowledge of market opportunities
for trade or investment to firms. Migration may increase familiarity in
the receiving country about the type of work ethic, quality of labor, and
business culture that exist in the home country, increasing the desirability
of investment (Leblang, 2010, pp. 586–587). Finally, migrants may have
knowledge of arbitrage opportunities. In a recent US Supreme Court case,
for instance, a student from Thailand bought textbooks in the Thai market,
where the books are much cheaper and then resold them in the United States
at a considerable profit.
Migrants can also increase the trust necessary for cross-border exchange.
Trade and investment often involves contracts in which payment and delivery do not occur simultaneously. Migrants can mitigate the risk involved
in these contracts through their ties with specific trustworthy individuals
back home or in the receiving country. They might also reduce the perceived
risk by familiarizing citizens in the receiving country with the sending country more generally. These effects might be especially important for forms of
investment—like foreign direct investment or venture capital—that are more
risky (Leblang, 2010)1 or for trade with countries where corruption is thought
to be high (Dunlevy, 2006; Gould, 1994).
Migrants and the remittances they send home can also affect policies
regarding capital and exchange rates. As the Mundell–Fleming model
shows, states must choose two of the three following policies: stable
exchange rates, open capital markets, and macroeconomic policy autonomy.
Many developing countries today choose to fix their exchange rates to
increase their credibility. Fixed exchange rates lower transaction costs for
investors, traders, and other groups that interact with the global economy
1. Foreign direct investment and venture capital are more risky because the investment is sunk into a
company or physical plant that are hard to move out of a country in a time of crisis. To contrast, portfolio
investment—investments in stocks or bonds—can easily be sold in a time of crisis.
6
EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES
(Frieden, 1991). Fixed exchange rates are also a way to combat inflation: by
fixing the currency, the country imports the macroeconomic policy of the
country whose currency it ties itself to.
Fixing the exchange rate, however, is not without risks. Given the globalization of international capital, few states are able to maintain capital controls. In
essence, fixing the exchange rate becomes a choice to renounce using macroeconomic policy as a tool to combat recessions. Remittances from migrants
help solve this problem because they are countercyclical and act as a fiscal transfer (Singer, 2010). Remittances increase during recessions and can
help increase spending at a time when spending in the economy is otherwise
decreased. This spending then has a multiplier effect that helps stimulate the
economy (Singer, 2010, p. 313). Remittances, thus, reduce the (political) costs
of maintaining a fixed exchange rate and make it more likely that developing
states will adopt one (Singer, 2010).
DIRECTIONS FOR FUTURE RESEARCH
Current research suggests two lines for future inquiry. First, scholars should
examine how firms’ increasingly long supply chains affect migration. We
know from other economic research that increased trade, opportunities to
move production overseas, and technology have contributed to the decline
of manufacturing in many wealthy countries (Feenstra & Hanson, 1996;
Kremer, 2006). This manufacturing has often moved to developing countries. How will this move affect employment opportunities in developing
countries and how will that affect the desire for migration? How will these
multinational firms affect the politics of migration in developing countries?
Will they lobby of increased immigration or decreased emigration to keep
their wage bills low? How will governments respond?
A second line of inquiry is to further explore how migrants, as economic
and political agents, increase economic and cultural ties. Much of the current
research has determined a link between migration and trade or investment
but has not tested more fine-grained causal mechanisms about why migration has these effects. As such, there is much variation left to explain. For
example, are certain migrants or migrant networks more or less likely to
facilitate the integration of economies? If so, why? Do characteristics of the
sending or receiving affect this process?
In addition, we could examine whether migration fosters peace. Many
scholars have examined trade and investment as a source of the democratic
peace, but few have examined whether migration has a similar pacifying
effect through the increased understanding of different cultures that comes
with migration. Migrants may also pass norms and institutions from one
country to another. For example, do migrants who go to democracies
Migration and Globalization
7
spread democratic norms when they return home or are they disillusioned
by democracy? If there is variation in this effect, why does that variation
exist?
CONCLUSION
Scholarship on globalization has focused on the integration of world markets for goods, services, and capital. But because migration has been studied primarily as domestic policy, it has only recently been considered from
the perspective of globalization scholarship. Recent scholarship shows that
studying migration from this perspective enhances both our understanding of migration and of globalization more generally. Immigration policy is
affected by trade and capital policy and, as well, may affect those two policies. Furthermore, scholars have shown that increased migration can increase
trade and investment as well as help states maintain fixed exchange rates.
Going forward, scholars should continue to examine how migration interacts
with other aspects of globalization to create a more complete understanding
of how the world economy works today.
REFERENCES
Barton, J. H., Goldstein, J. L., Josling, T. E., & Steinberg, R. H. (2006). The evolution of
the trade regime: Politics, law, and economics of the GATT and the WTO. Princeton, NJ:
Princeton University Press.
Dunlevy, J. A. (2006). The influence of corruption and language on the protrade effect
of immigrants: Evidence from the American states. The Review of Economics and
Statistics, 88(1), 182–186.
Feenstra, R. C., & Hanson, G. H. (1996). Globalization, outsourcing, and wage
inequality. The American Economic Review, 86(2), 240–245.
Felbermayr, G. J., & Toubal, F. (2012). Revisiting the trade-migration nexus: Evidence
from new OECD data. World Development, 40(5), 928–937.
Frieden, J. (1991). Invested interests: The politics of national economic policies in a
world of global finance. International Organization, 45(4), 425–451.
Gould, D. M. (1994). Immigrant links to the home country: Empirical implications
for U.S. bilateral trade flows. The Review of Economics and Statistics, 76(2), 302–316.
Hatton, T. J., & Williamson, J. G. (1998). The age of mass migration: Causes and economic
impact. New York, NY: Oxford University Press.
Hatton, T. J., & Williamson, J. G. (2005). Global migration and the world economy. Cambridge, MA: The MIT Press.
Hatzigeorgiou, A. (2010). Migration as trade facilitation: Assessing the links between
international trade and migration. The B.E. Journal of Economic Analysis & Policy,
10(1), Article 24.
Hull, C. (1948). The memoirs of Cordell hull. New York, NY: Macmillan Co.
8
EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES
Ikenberry, G. J. (2001). After victory: Institutions, strategic restraint, and the rebuilding of
order after major wars. Princeton, NJ: Princeton University Press.
Jacks, D. S. (2005). Immigrant stocks and trade flows, 1870–1913. Journal of European
Economic History, 34(3), 625–649.
Keynes, J. M. (1919). The economic consequences of the peace. New York, NY: Harcourt,
Brace and Howe.
Kremer, M. (2006). Globalization of labor markets and inequality. In S. M. Collins &
C. Graham (Eds.), Brookings Trade Forum (pp. 211–228). Washington, DC: Brookings
Institution Press.
Leblang, D. A. (2010). Familiarity breeds investment: diaspora networks and international investment. American Political Science Review, 104, 584–600.
Mundell, R. A. (1957). International trade and factor mobility. American Economic
Review, 47(3), 321–335.
Obstfeld, M., & Taylor, A. M. (2003). Globalization and capital markets. In M. D.
Bordo, A. M. Taylor & J. G. Williamson (Eds.), Globalization in historical perspective
(pp. 121–187). Cambridge, MA: National Bureau of Economic Research.
Peters, M. E. (2014). Trade, Foreign Direct Investment and Immigration Policy Making in the US. International Organization, 68(4), 811–844.
Peters, M. E. (2015). Open trade, closed borders: Immigration policy in the era of
globalization. World Politics, 67(1).
Singer, D. A. (2010). Migrant remittances and exchange rate regimes in the developing world. American Political Science Review, 104(2), 307–323.
United Nations Development Program (2009). Human development report. New York,
NY: United Nations.
FURTHER READING
On Migration and Remittances
Brown, S. S. (2006). Can remittances spur development? A critical survey. International Studies Review, 8, 55–75.
Card, D. (2009). How immigration affects US cities. In R. Inman (Ed.), Making cities
work: Prospects and policies for urban America (pp. 158–200). Princeton, NJ: Princeton
University Press.
Fitzgerald, J., Leblang, D. A., & Teets, J. C. (2009). Defying the law of gravity: The political
economy of international migration. World Politics, 66(3), 406–445.
Hainmueller, J., & Hiscox, M. J. (2010). Attitudes toward highly skilled and
low-skilled immigration: Evidence from a survey experiment. American Political
Science Review, 1–24.
Hanson, G. H., Scheve, K., & Slaughter, M. J. (2007). Public finance and individual
preferences over globalization strategies. Economics & Politics, 19(1), 1–33.
Massey, D. S., Arango, J., Hugo, G., Kouaouci, A., Pellegrino, A., & Taylor, J. E. (1993).
Theories of international migration: A review and appraisal. Population and Development Review, 19(3), 431–466.
Migration and Globalization
9
On Migration and Globalization
Esteves, R., & Khoudour-Casteras, D. (2009). A fantastic rain of gold: European
migrants’ remittances and balance of payments adjustment during the gold standard period. The Journal of Economic History, 69(4), 951–985.
Markusen, J. R. (1983). Factor movements and commodity trade as complements.
Journal of International Economics, 14(3–4), 341–356.
O’Rourke, K. H., & Williamson, J. G. (1999). Globalization and history: The evolution of
a nineteenth-century Atlantic economy. Cambridge, MA: MIT Press.
MARGARET E. PETERS SHORT BIOGRAPHY
Margaret E. Peters is an Assistant Professor in the Department of Political Science at Yale University. Her work focuses on migration as part of
international political economy. Her book project focuses on the diversity
of immigration policies within labor scarce countries over the last two
centuries. She shows that immigration policy has been affected by prior
policy choices to open the economy to capital and/or trade. Other aspects
of her work examine public opinion on immigration and trade policy;
when states use treaties to regulate migration; how immigration policy
affects the integration of migrants; and the effect of remittances on support
for democratic governance. More about Professor Peters can be found at
http://margaretpeters.commons.yale.edu/.
RELATED ESSAYS
Mediation in International Conflicts (Political Science), Kyle Beardsley and
Nathan Danneman
Globalization Backlash (Sociology), Mabel Berezin
Globalization: Consequences for Work and Employment in Advanced
Capitalist Societies (Sociology), Tony Elger
Global Income Inequality (Sociology), Glenn Firebaugh
Migrant Networks (Sociology), Filiz Garip and Asad L. Asad
Immigration and the Changing Status of Asian Americans (Sociology),
Jennifer Lee
Visualizing Globalization (Sociology), Matthew C. Mahutga and Robert
Nash-Parker
Immigrant Health Paradox (Sociology), Kyriakos S. Markides and Sunshine
Rote
Politics of Immigration Policy (Political Science), Jeannette Money
Below-Replacement Fertility (Sociology), S. Philip Morgan
Cultural Conflict (Sociology), Ian Mullins
10
EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES
Organizations and the Production of Systemic Risk (Sociology), Charles
Perrow
Demography and Cultural Evolution (Anthropology), Stephen Shennan
Culture and Globalization (Sociology), Frederick F. Wherry
Migration and Globalization
MARGARET E. PETERS
Abstract
Scholarship on globalization since the 1970s has focused on the increasing integration of world markets for goods, services, and capital. International migration, by
comparison, has received relatively little attention. As recent scholarship has shown,
the absence of migration from studies on globalization has made our understanding of other aspects of globalization incomplete. Immigration policy interacts with
trade and capital policy. All three policies affect firms’ production strategies and their
support for openness in the other policy areas. Migration, trade, and capital flows
also interact. For instance, increased migration can increase trade and investment as
well as help states maintain fixed exchange rates. This entry discusses these effects
in greater detail and discusses paths for future research.
INTRODUCTION
Recent scholarship on globalization has focused on the increasing integration
of world markets for goods, services, and capital. In contrast, international
migration has received far less attention by international relations scholars.
This is likely because the flow of people has not kept pace with the flow of
goods and services across border, in large part due to more restrictive policies, and further, policymakers have tended to frame migration policy as
domestic policy.
Migration, along with trade and capital flows, was a hallmark of the
nineteenth century era of globalization. As Keynes famously reflected in The
Economic Consequences of the Peace:
The inhabitant of London could order by telephone, sipping his morning tea
in bed, the various products of the whole earth, in such quantity as he might
see fit, and reasonably expect their early delivery upon his doorstep; he could
at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share,
without exertion or even trouble, in their prospective fruits and advantages;
or be could decide to couple the security of his fortunes with the good faith of
Emerging Trends in the Social and Behavioral Sciences. Edited by Robert Scott and Stephen Kosslyn.
© 2015 John Wiley & Sons, Inc. ISBN 978-1-118-90077-2.
1
2
EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES
the townspeople of any substantial municipality in any continent that fancy or
information might recommend. (Keynes, 1919, p. 11)
The Great War and then the Great Depression ended this era. New restrictions on immigration restrictions were coupled with tightened capital controls and heightened tariffs. These actions put a halt to the movement of
people, money, and goods.
In the wake of World War II, policymakers, especially those in the
United States, sought to reopen world markets for goods and capital.
These efforts were bolstered as the Communist threat took shape (Barton, Goldstein, Josling, & Steinberg, 2006; Hull, 1948; Ikenberry, 2001).
Believing that economic deglobalization had fomented military conflict,
they forged a patchwork of interlocking international regimes to govern
global security, trade, and finance. They hoped to secure the benefits of the
integration achieved in the nineteenth century without surrendering the
policy autonomy they had reclaimed in the interwar period. Yet, apart from
arrangements to accommodate refugees, provisions to govern international
economic migration were conspicuously absent. Left as a domestic policy,
international migration has been increasingly restricted at least since the
end of Bretton Woods. As a result, trade regained its pre-World War I levels
by the 1970s, and global financial flows regained their peak in the 1980s
(Obstfeld & Taylor, 2003), but migration flows still remain well below their
pre-World War I levels (United Nations Development Program, 2009).
Scholars studying migration have similarly conceptualized migration as
a domestic concern, focusing on four domestic-level variables to explain
changes in policy: the role of labor unions, who dislike that immigrants
compete with them for jobs; nativists who dislike immigration for cultural
reasons; tax payers, who dislike the burden that immigrants might place on
the social welfare system; and immigrants themselves, who seek to maintain
openness for their own security or to bring in friends and family. Recently,
however, there has been a new wave of interest in migration as scholars have
coupled these traditional perspectives with a new focus that examines how
immigration interacts with other aspects of globalization. Two lines of this
research are discussed as follows: first, the interaction of immigration policy
with trade and capital policy; and, second, the interaction of immigrant
flows with flows of goods and money.
FOUNDATIONAL RESEARCH
The foundational research for the study of migration as a component of
globalization comes from economics, particularly models of trade. The
Stolper–Samuelson model is the canonical model tying together trade,
Migration and Globalization
3
capital, and migration policy. The Stolper–Samuelson model of trade builds
on the Ricardian model of comparative advantage in which countries are
assumed to have different factor endowments. In the simple model, there
are two countries: one relatively abundant in labor and the other relatively
abundant in capital. Each country faces an incentive to specialize in production that utilizes its abundant factor most intensively. Each country then
engages in trade to enjoy the diversity of products. Within each country,
owners of the relatively scarce factor suffer a real decrease in the returns to
their factor (and thus their income) as the country specializes in production
that uses the abundant factor intensively. In contrast, owners of the abundant
factor will see a real increase in the returns to their factor. Similarly, opening
borders to the movement of labor or capital will lead to movements that
tend to equalize the distribution of these factors across countries. Movement
of factors, therefore, also increases the real returns to the abundant factor
while decreasing the real returns to the scarce factor. For countries looking
to open their economies, economic theory does not prioritize which factor
should be liberalized.
Furthermore, Mundell (1957) argues that closure to one of these flows may
stimulate the flow of the others. For example, if trade is closed but immigration is open, states with abundant capital will see an increase in immigration
as people move from states with abundant labor to those with scarce labor. In
contrast, if trade is open but immigration is closed, trade should increase as
the movement of goods essentially replaces the movement of people. From
this foundational research, it is clear that migration, trade, and capital movement are inextricably tied to one other and should be studied together.
Hatton and Williamson (1998, 2005) have led the charge in testing these
theories empirically. Specifically, they examine the trends in migration from
the nineteenth through the twenty-first centuries. They argue that migration
was an important part of globalization in the nineteenth century, contributing
to the convergence of wages between the higher wages of the New World
and the lower wages of Europe. Using econometric tests, they also show that
wages between the developed and developing world would converge faster
today if migration were more open.
RECENT RESEARCH
RESEARCH ON THE INTERACTION OF IMMIGRATION, TRADE, AND CAPITAL POLICY
Peters (2014, 2015) argues that trade and capital policy can affect on immigration policy. She argues that immigration policy, particularly with regard to
low-skill immigrants, is largely driven by a given country’s trade policy and
the ability of that country’s firms to move production overseas (henceforth,
4
EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES
firm mobility). Changes in trade policy and firm mobility affect the demand
for immigration by firms, changing political support for open immigration.
The Stolper–Samuelson theorem states that trade closure leads to an
increase in low-skill intensive production (and a concomitant increase in
wages) in states where low-skill labor is scarce. Without an increase in the
labor supply, any advantage that firms gain from trade protection may be
erased due to increasing wages. As a result, firms lobby for increased immigration when trade is restricted. As firms tend to be powerful, immigration
should be relatively open (Peters, 2014, 2015).
In contrast, liberalizing trade in such states leads to a decrease in low-skill,
labor-intensive production, reducing the need for labor and, in many cases,
forcing businesses to close. Businesses that close no longer lobby the policymaker. For those that remain open, the fall in wages reduces their incentives
lobby policymakers. Given the existence of groups who oppose immigration,
the policymaker will respond by restricting immigration (Peters, 2014, 2015).
Changes in capital mobility have a similar effect because it affects
firm mobility. When firms are immobile across borders, they are wholly
dependent on the domestic labor market. This increases their support
for immigration. When firms relocate abroad, they can take advantage of
foreign lower cost labor without migration. Once they “offshore,” they
have less incentive to care about immigration policy at home. This removes
potentially key support in favor of open immigration (Peters, 2014, 2015).
Finally, we can consider how trade and capital policy respond to immigration policy. Open immigration may increase support for open trade
as it increases the competitiveness of those firms that might otherwise be
threatened by trade. To maintain this support, however, immigration would
have to continue to open in proportion to increasing trade openness. But
this is likely unsustainable at high levels of trade openness because the level
of immigration necessary to sustain firms’ competitiveness would greatly
decrease wages, potentially increase fiscal costs, and likely lead to a nativist
backlash. Open immigration may also reduce pressure for open capital,
again, because firms would be more competitive at home. In contrast, a
restrictive immigration policy may make open trade harder to achieve, as
labor costs remain high, and may increase pressure for open capital so that
threaten firms can move overseas (Peters, 2014, 2015).
RESEARCH ON THE INTERACTION OF MIGRANT FLOWS WITH TRADE AND MONETARY FLOWS
AND POLICY
The second direction of research examines how migrant flows, and the remittances they engender, interact with other aspects of globalization. One line
of inquiry examines how migrants help bridge the informational gaps and
Migration and Globalization
5
transaction costs associated with international trade and international investment (e.g., Dunlevy, 2006; Felbermayr & Toubal, 2012; Gould, 1994; Hatzigeorgiou, 2010; Jacks, 2005; Leblang, 2010).
Migrants can facilitate trade and investment through several channels: they
often have valuable ties with their home country, including knowledge of
home country language, markets, preferences, and business contacts (Gould,
1994, p. 302; Leblang, 2010). Migrants sometimes relocate specifically to
develop trade or invest overseas. Migrants also create a market for goods
from their home country when they live abroad and, perhaps, a market
for goods from the foreign country when they return home. Similarly,
migrants often invest in their home country after moving. In addition,
migrants can help firms in the states that receive them trade and invest in
their home countries by providing language skills or making their language
more common. They might also bring knowledge of market opportunities
for trade or investment to firms. Migration may increase familiarity in
the receiving country about the type of work ethic, quality of labor, and
business culture that exist in the home country, increasing the desirability
of investment (Leblang, 2010, pp. 586–587). Finally, migrants may have
knowledge of arbitrage opportunities. In a recent US Supreme Court case,
for instance, a student from Thailand bought textbooks in the Thai market,
where the books are much cheaper and then resold them in the United States
at a considerable profit.
Migrants can also increase the trust necessary for cross-border exchange.
Trade and investment often involves contracts in which payment and delivery do not occur simultaneously. Migrants can mitigate the risk involved
in these contracts through their ties with specific trustworthy individuals
back home or in the receiving country. They might also reduce the perceived
risk by familiarizing citizens in the receiving country with the sending country more generally. These effects might be especially important for forms of
investment—like foreign direct investment or venture capital—that are more
risky (Leblang, 2010)1 or for trade with countries where corruption is thought
to be high (Dunlevy, 2006; Gould, 1994).
Migrants and the remittances they send home can also affect policies
regarding capital and exchange rates. As the Mundell–Fleming model
shows, states must choose two of the three following policies: stable
exchange rates, open capital markets, and macroeconomic policy autonomy.
Many developing countries today choose to fix their exchange rates to
increase their credibility. Fixed exchange rates lower transaction costs for
investors, traders, and other groups that interact with the global economy
1. Foreign direct investment and venture capital are more risky because the investment is sunk into a
company or physical plant that are hard to move out of a country in a time of crisis. To contrast, portfolio
investment—investments in stocks or bonds—can easily be sold in a time of crisis.
6
EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES
(Frieden, 1991). Fixed exchange rates are also a way to combat inflation: by
fixing the currency, the country imports the macroeconomic policy of the
country whose currency it ties itself to.
Fixing the exchange rate, however, is not without risks. Given the globalization of international capital, few states are able to maintain capital controls. In
essence, fixing the exchange rate becomes a choice to renounce using macroeconomic policy as a tool to combat recessions. Remittances from migrants
help solve this problem because they are countercyclical and act as a fiscal transfer (Singer, 2010). Remittances increase during recessions and can
help increase spending at a time when spending in the economy is otherwise
decreased. This spending then has a multiplier effect that helps stimulate the
economy (Singer, 2010, p. 313). Remittances, thus, reduce the (political) costs
of maintaining a fixed exchange rate and make it more likely that developing
states will adopt one (Singer, 2010).
DIRECTIONS FOR FUTURE RESEARCH
Current research suggests two lines for future inquiry. First, scholars should
examine how firms’ increasingly long supply chains affect migration. We
know from other economic research that increased trade, opportunities to
move production overseas, and technology have contributed to the decline
of manufacturing in many wealthy countries (Feenstra & Hanson, 1996;
Kremer, 2006). This manufacturing has often moved to developing countries. How will this move affect employment opportunities in developing
countries and how will that affect the desire for migration? How will these
multinational firms affect the politics of migration in developing countries?
Will they lobby of increased immigration or decreased emigration to keep
their wage bills low? How will governments respond?
A second line of inquiry is to further explore how migrants, as economic
and political agents, increase economic and cultural ties. Much of the current
research has determined a link between migration and trade or investment
but has not tested more fine-grained causal mechanisms about why migration has these effects. As such, there is much variation left to explain. For
example, are certain migrants or migrant networks more or less likely to
facilitate the integration of economies? If so, why? Do characteristics of the
sending or receiving affect this process?
In addition, we could examine whether migration fosters peace. Many
scholars have examined trade and investment as a source of the democratic
peace, but few have examined whether migration has a similar pacifying
effect through the increased understanding of different cultures that comes
with migration. Migrants may also pass norms and institutions from one
country to another. For example, do migrants who go to democracies
Migration and Globalization
7
spread democratic norms when they return home or are they disillusioned
by democracy? If there is variation in this effect, why does that variation
exist?
CONCLUSION
Scholarship on globalization has focused on the integration of world markets for goods, services, and capital. But because migration has been studied primarily as domestic policy, it has only recently been considered from
the perspective of globalization scholarship. Recent scholarship shows that
studying migration from this perspective enhances both our understanding of migration and of globalization more generally. Immigration policy is
affected by trade and capital policy and, as well, may affect those two policies. Furthermore, scholars have shown that increased migration can increase
trade and investment as well as help states maintain fixed exchange rates.
Going forward, scholars should continue to examine how migration interacts
with other aspects of globalization to create a more complete understanding
of how the world economy works today.
REFERENCES
Barton, J. H., Goldstein, J. L., Josling, T. E., & Steinberg, R. H. (2006). The evolution of
the trade regime: Politics, law, and economics of the GATT and the WTO. Princeton, NJ:
Princeton University Press.
Dunlevy, J. A. (2006). The influence of corruption and language on the protrade effect
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Migration and Globalization
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On Migration and Globalization
Esteves, R., & Khoudour-Casteras, D. (2009). A fantastic rain of gold: European
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MARGARET E. PETERS SHORT BIOGRAPHY
Margaret E. Peters is an Assistant Professor in the Department of Political Science at Yale University. Her work focuses on migration as part of
international political economy. Her book project focuses on the diversity
of immigration policies within labor scarce countries over the last two
centuries. She shows that immigration policy has been affected by prior
policy choices to open the economy to capital and/or trade. Other aspects
of her work examine public opinion on immigration and trade policy;
when states use treaties to regulate migration; how immigration policy
affects the integration of migrants; and the effect of remittances on support
for democratic governance. More about Professor Peters can be found at
http://margaretpeters.commons.yale.edu/.
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