2013-05-17

Co.Exist

Want To Boost The Economy (And Make The World Better)? Let In More Immigrants

Not only are immigrants huge drivers of small businesses, but they tend to bring about good changes in their home countries—both economically and politically. What could we do if we made it easier for them to come here?

We love to exalt changemakers. The social entrepreneur, the impact investor, the innovator—but the bravest changemaker of all turns out to be the most controversial: the immigrant.

Here in the United States, the current cap for family- or employer-sponsored visas per country of origin is just 25,620—the same number for Belgium or New Zealand as it is for China or India. There are hundreds of millions who want to move but can’t because their countries’ quotas get filled up year after year. That’s a shame, because there’s so much potential for change just waiting to be unleashed behind those quota walls.
If everyone who wanted to move to another country could do so, the effect of could be worth trillions more dollars in global GDP, according to a growing movement of economists. Michael Clemens, a senior fellow at the Center for Global Development, compiled much of that research in a 2011 paper. In it, he proposes a thought experiment to convey a sense of what’s at stake:

  • Imagine a world divided into a rich region and a poor region. In the rich region, one billion people make $30,000 a year; in the poor region, six billion people make $5,000 a year.
  • The people in the poor region aren’t as productive, so assume each would only be worth $20,000 a year in the rich region.
  • Also assume that as people move from the poor region to the rich region, the labor supply increases, lowering overall wages so that the average gain in income is only $12,500 a year.
  • If half of the poor region population moves to the rich region, the global economy gains $23 trillion — which equals 38 percent of global GDP in real life.

Keep in mind, the models summarized in the paper are much more nuanced, giving reasons to believe that $23 trillion could really be lower or much, much higher. "This is not how economists actually estimate the gains to migration, it’s a sanity-check on their results using an epic simplification. And it bears out the vastness of the gains," says Clemens.

Expanding or shifting the 25,620 cap to a more points-based system based on education and other factors is at the center of heated debate in Congress right now. But as one economist noted recently to NPR, such a system seems kind of absurd, proposing in satire that maybe Congress should also institute a system of kicking existing residents out of the country if they didn’t meet certain standards of education and language competency.

Politics aside, even with today’s flawed immigration systems, immigrants are already a powerful force for change. Given their willingness to take the risk of moving overseas, it shouldn’t be surprising that in the countries where they end up, immigrants boost entrepreneurship. Immigrants have been more likely to start a business than native born citizens in every U.S. Census since 1880. At last check, they remain twice as likely to start a business than native born residents. Forty percent of Fortune 500 companies were founded by immigrants or their children.

But it’s back in their countries of origin where perhaps immigrants may actually produce the most change. Since 2000, remittances to developing countries have risen sharply, with only a small predictable setback from 2008 to 2009. In 2010, as reported recently by the BBC, remittances to Africa outweighed official development assistance to the continent. Remittances can also stimulate investment in developing countries by stimulating consumption on local goods and services, as Clemens told participants in a recent Tweet chat on immigration.

"But," as Ethiopian-born Brooklynite Solome Lemma wrote in a powerful blog post last October, "when we reduce our contributions to one single, vague category—remittances—we deny ourselves the full expression of who we are, what we do, and what we can be. We deny our roles as givers, shapers, and investors."

Lemma, whom you may know as @InnovateAfrica, felt the time was right in 2011 to begin working full time on building a platform for the African diaspora to use remittances and other resources at their disposal to support changemakers more strategically in their countries of origin. In October 2012, after years of brewing, Solome Lemma and co-founder Zanele Sibanda (born in Zimbabwe) launched Africans in the Diaspora.

"As I looked around at the tremendous power of our resources, the growth in our numbers, and the ineffectiveness of aid and charity in Africa, the environment was simply ripe," says Lemma "I knew it was time for us to build our own platform so that we can affect meaningful change and engage in these conversations as partners and leaders, not just subjects and objects of discussion."

Clemens agrees. He points to the research of Berkeley’s AnnaLee Saxenian, who documented the role of the Taiwanese and Indian diaspora in the origins of the high tech industries in those countries. Or Antonio Spilimbergo, who has rigorously shown that when more students from a developing country study abroad in more democratic countries, the country of origin tends to get more democratic. Or Michele Beine, Frédéric Docquier, and Maurice Schiff who explored how international migrants bring home new norms about women’s fertility.

"In other words, those students are sending home ideas," Clemens adds. "Migration barriers cut off all of these benefits, along with cutting off flows of cash remittances."

Others have taken note. The World Bank and U.S. Agency for International Development launched initiatives in recent years to better engage with diaspora communities hoping to make a difference in their countries of origin. Western Union, which dominates with a 17% market share in remittances worldwide, has been exploring ways to use corporate matching to incentivize the pooling of remittances at either end of the transaction to effect change. They’ve also supported research into ways to encourage more saving and investment using funds from remittances.

"We really view our customers as the greatest philanthropists on earth," says Talya Bosch, vice president of social ventures at Western Union. "The average person doesn’t give away 30% or 50% of their income every day. A lot of immigrants do."

So who are we to stand in their way?

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3 Comments

  • MrRocking

    We are the people turned away from the agencies with jobs in the window because there are no jobs.

    We are the people in the workplace who the migrants don't communicate with because learning a new language in a new country is difficult.

    We are the people who say please and thank you and smile because these are the social lubricants that let each other know where we stand, that we understand and are understood. We are ignored.

    We are the people who are expected to live 8 to a room because it's good for the economy.

    We have spent 60 years fighting racism only to have new racists to fight.

    We are whiny entitled bitches who think the world revolves around our every need.