Migration and trade: Theory with an application to the Eastern-Western European integration

The remarkable increase in trade flows and in migratory flows of highly educated people are two important features of globalization of the last decades. This paper extends a two-country model of inter- and intra-industry trade to a rich environment featuring technological differences, skill differences and the possibility of international labor mobility. The model is used to explain the patterns of trade and migration as countries remove barriers to trade and to labor mobility. We parameterize the model to match the features of the Western and Eastern European members of the EU and analyze first the effects of the trade liberalization which occurred between 1989 and 2004, and then the gains and losses from migration which are expected to occur if legal barriers to labor mobility are substantially reduced. The lower barriers to migration would result in significant migration of skilled workers from Eastern European countries. Interestingly, this would not only benefit the migrants and most Western European workers but, via trade, it would also benefit the workers remaining in Eastern Europe.     

Some current topics of labour migration in Europe

The imposition of immigration bans ended an era of large-scale labour migration in Western Europe. Migration policy will have to centre on the consolidation and integration of the foreign population.     

Foreign workers-development aid by LDCs?

People have up to now seen in the armies of foreign workers a useful labour reserve, without which the highly industrialised nations of northern Europe would suffer a decline of prosperity. However, the present article, in examining the economic effects of this mass transfer of workers, makes the point that it may have highly adverse consequences for host countries.     

Foreign direct investment in Central Europe

Central European governments see foreign direct investment (FDI) as one of the main macroeconomic mechanisms for stabilizing the volatile process of economic and political transition. What are the favorite destinations of FDI in Central Europe? What are the motives of Western investors? Why does the amount of FDI vary so much between countries?     

Liberalising Temporary Movement of Natural Persons: An Agenda for the Development Round

We discuss liberalising the temporary mobility of workers under Mode 4 of the GATS, particularly the movement of medium and low skilled service providers between developing and developed countries. Such mobility potentially offers huge returns: a flow equivalent to three per cent of developed countries’ skilled and unskilled work forces would generate an estimated increase in world welfare of over US$150 billion, shared fairly equally between developing and developed countries. The larger part of this emanates from the less‐skilled, essentially because losing higher‐skilled workers cuts output in developing countries severely. The mass migration of less skilled workers raises fears in developed countries for cultural identity, problems of assimilation and the drain on the public purse. These fears are hardly relevant to temporary movement, however. The biggest economic concern from temporary mobility is its competitive challenge to local less skilled workers. But as populations age and the average levels of training and education rise, developed countries will face an increasing scarcity of less skilled labour. Temporary mobility thus actually offers a strong communality of interest between developing and developed countries. The remainder of the paper looks at the GATS provisions on Mode 4 and the commitments that have been made under it. The paper reviews several official proposals for the Doha talks, including the very detailed one from India, and considers several countries’ existing schemes for the temporary movement of foreign workers. Many countries have long had bilateral foreign worker programmes, and some regional agreements provide for liberal and flexible movement. These show what is feasible and how concerns can be overcome. We caution that, to be useful, any WTO agreement must increase mobility, not just bureaucratise it. The paper concludes with some modest and practical proposals. We suggest, inter alia, that licensing firms to arrange the movement of labour is the most promising short‐term approach to increasing temporary mobility.     

Emigration and wages: The EU enlargement experiment

The enlargement of the European Union provides a unique opportunity to study the impact of the lifting of migration restrictions on the migrant sending countries. With EU enlargement in 2004, 1.2 million workers from Eastern Europe emigrated to the UK and Ireland. I use this emigration wave to show that emigration significantly changed the wage distribution in the sending country, in particular between young and old workers. Using a novel dataset from Lithuania, the UK and Ireland for the calibration of a structural model of labor demand, I find that over the period of five years emigration increased the wages of young workers by 6%, while it had no effect on the wages of old workers. Contrary to the immigration literature, there is no significant effect of emigration on the wage distribution between high-skilled and low-skilled workers.     

Latvia

Situated on a trading crossroads between Western Europe and Russia, Latvia has emerged as one of the most successful countries in Central Europe. This article provides a comprehensive review of Latvia's historical development, political structure, economy, investment, and foreign‐trade environment. It aims to be a useful source of information for foreign businessmen and investors interested in doing business in Latvia. In the fall of 1991, when the Baltic States separated from the Soviet system, no one predicted that these countries would make the transition to a market‐based economy as quickly and as effectively as they have. However, 11 years later, with notable growth and rising standards of living, such thinking is no longer considered overly optimistic. “It is the biggest, most complicated, and most promising piece of the new Europe,” wrote The Economist (1998) in reference to the Baltic region. Wherever there is new growth, there are many business opportunities to be found. Latvia's position in the center of this region is one indication of the business potential for those with the capacity to do business there. © 2003 Wiley Periodicals, Inc.     

Implications of the introduction of the Euro for the Mediterranean countries

The Mediterranean peripheral countries cannot afford to be passive viewers of the fundamental changes that are taking place in Europe after the introduction of the Euro. The new developments pose formidable challenges and opportunities. It will be argued that no single group of developing countries will be more affected by these changes than the Mediterranean countries given their geographical proximity to the region and their long historical record of extensive and large economic interactions (trade, finance, and migration). This article examines the implications of the introduction of the single currency in Europe on Mediterranean central bank reserves and foreign external liabilities, trade and capital flow, and exchange rate policies. It is shown that since most Mediterranean trade is with the EU, Mediterranean central banks will be necessitated to hold major portions of their foreign exchange reserves in Euros. Also, a Mediterranean currency peg to the Euro, or to a basket of currencies where the Euro is allocated, will be important in reducing financial and trade transaction costs. It will also be hypothesized that Mediterranean foreign debts will eventually have to be converted to Euros. Finally, parallels between this region and the U.S–Caribbean region will be drawn to reinforce the argument that trade and capital dependence will eventually lead to a pegging of the Mediterranean currencies to the Euro. © 2003 Wiley Periodicals, Inc.     

Saving taxes through foreign plant ownership

This paper analyzes to which extent foreign plant ownership involves lower tax payments than domestic plant ownership. We assess hypotheses about the tax savings of endogenous foreign subsidiary ownership relative to domestic firms in a data-set of 507,542 foreign- and domestically-owned manufacturing plants in Europe. We identify a significant profit tax saving of endogenous foreign ownership in high-tax host countries. There is evidence of profit shifting which seems more pronounced than debt shifting in Europe: multinationals earn significantly higher profits than comparable domestic units in low-tax countries but significantly lower ones in high-tax countries. Consequently, profit tax payments of foreign-owned firms are lower than those of domestic firms in high-tax countries but higher in low-tax countries.     

A simple model of brain circulation

This paper analyzes the allocation of two types of individuals differentiated by talent between two countries where they choose to be workers or entrepreneurs. An equilibrium with international migration exists when countries' talent endowments are sufficiently different. It is consistent with one-way or two-way migration whether individuals are entrepreneurs or workers. Although allowing migration increases domestic welfare in one country and decreases it in the other, it is always supported by majority voting in both countries.     

跨国移民、人力资本结构与技术创新

本文在"新人才流失经济学"的框架下,以分工理论为基础,分析了跨国移民对于发展中国家人力资本结构及技术创新的影响。分析显示,由于较低的知识存量和较高的协调成本,在技术水平较为落后的移民来源国,熟练劳动力通常更倾向于选择通才教育,从而独立进行创新活动。相反,在技术较为先进的移民目标国,熟练劳动力则更倾向于选择专才教育,从而以分工合作的方式从事创新活动。受国内外协调成本差异的影响,跨国移民会激励移民来源国的劳动力更多的选择专才教育,从而改变移民来源国人力资本的结构并影响技术创新的效率。     

Structural Change,Economic Crisis and International Labour Migration in East Asia

Increased international labour migration was one important dimension of structural change and globalisation in East Asia from the mid 1980s. Large international movements of mainly unskilled contract labour occurred in response to widening wage gaps between more and less developed countries in the region as the former experienced rapid structural change. Labour importing countries increasingly relied on unskilled migrant workers in less preferred jobs, in both export‐oriented and non‐tradable goods industries. The Asian economic crisis dramatically influenced the context in which international labour mobility had occurred in the pre‐crisis period. Important issues included a possible reversal in role of international migration in structural change, both among unskilled contract workers and more skilled migrants, and replacement of migrants by unemployed local workers. The paper argues that the Asian economic crisis did not reverse the fundamental trend toward greater reliance on unskilled migrant workers in agriculture, manufacturing and service industries. Business and professional migration remained significant and even rose in some countries during the crisis. However, several countries were forced to develop a more coherent policy towards migrant workers, in light of the social impact of the crisis.     

The Effect of Foreign Direct Investment on International Migration: Does Education Matter?

Using migration data in 1990 and 2000, we find that inward foreign direct investment (FDI) in non‐OECD countries affects the out‐migration of individuals with tertiary and secondary education to OECD countries originating the investments, but has no significant effect on the out‐migration of individuals with primary education. Distinguishing between linkage and home effects, our results show a dominant home effect of FDI for individuals with tertiary education, but a stronger linkage effect for those with secondary education. The existing stock of former migrants in foreign countries influences the out‐migration of individuals with primary education.     

Options in foreign economic relations for Central and Eastern Europe

Following the collapse of the CMEA, the foreign trade of the countries of Central and Eastern Europe declined drastically with dire consequences for output, incomes and employment in these countries. What options do the former CMEA members have for revitalizing their foreign trade? What impediments will have to be surmounted in each case?     

The Regulation of Professional Migration: Insights from the Health and IT Sectors in ASEAN

This paper develops several indicators to measure the extent and depth of rules governing international migration. It is set in the context of moves towards further liberalisation of services trade and associated labour mobility (Mode 4) under GATS and related regional trading arrangements. Ten Southeast Asian countries at various stages of economic development are examined as a case study, with special reference to health care and information technology. These sectors are priority sectors for regional cooperation in services trade in ASEAN, but were expected to represent opposite extremes in terms of the regulation of migration. The study finds that the more advanced countries tend to have more liberal regimes for international movements of skilled manpower, although there were smaller differences regarding general visa and work permit arrangements. Generic restrictions on mobility were related to trade policies, as well as to direct barriers (often country‐specific) to migration. They included minimum salary requirement, levies on foreign workers, economic needs tests, and limitations related to language, education and job experience. Controls were more extensive in the health care sector, related to social considerations as well as professional organisational interests.     

East Asian FDI in Europe and Germany

During the 1980s foreign direct investment (FDI) expanded remarkably. Simultaneously, the regional structure of foreign direct investment changed. This relationship is discernible among industrial countries, as well as between industrial and developing countries. Of particular importance is the interface of foreign trade relations between the “Triad” and the economically dynamic East Asian and Pacific area. This article highlights, in particular, foreign investment coming from Eastern Asia into Europe and Germany.     

外资银行进入对中东欧国家信贷规模的影响

本章对中东欧11个国家1997-2008年进行实证研究,检验外资银行进入对东道国信贷规模的影响.回归结果显示外资银行进入未对中东欧国家的信贷规模造成影响.银行业基本实现了全面开放,外资银行已经占据了绝对的份额;外资银行以并购进入中东欧国家的方式,较难起到提高竞争程度的作用;随着中东欧国家不断加入欧盟,内资银行与外资银行差异越来越小.     

Will California come to Europe? A Numerical Simulation

We discuss under what conditions California’s electricity crisis may happen in Western European countries, taking The Netherlands as an example. We use a simulation model containing the electricity generation and distribution sector. We simulate exogenous events, such as a sudden shift in demand levels, a sharp rise in world fuel prices and a cutback in foreign supply. We use the model to investigate whether supply remains secured under different regulatory regimes. Our results suggest a trade-off between controlled prices and security of supply. Europe’s electricity supply security is vulnerable if prices are not allowed to reflect scarcity. If prices are unrestricted however, they will reach oligopoly levels.     

English in Product Advertisements in Non-English-Speaking Countries in Western Europe: Product Image and Comprehension of the Text

ABSTRACT

Although English has been shown to be the most frequently used foreign language in product advertisements in countries where it is not the native language, little is known about its effects. This article examines the response to advertisements in English compared to the response to the same ad in the local language in Western Europe on members of the target group for which the ad was intended: 715 young, highly educated female consumers. The use of English in a product ad does not appear to have any impact on image and price of the product, but it does affect text comprehension: the meaning of almost 40% of the English phrases was not understood. These results were the same for all countries involved in the study, irrespective of whether the respondents’ (self-) reported proficiency in English is high or low.     

Problems of migrant workers' return to their home countries

Germany's migration statistics for 1982 and 1983 show, for the first time in some years, an excess of out migration over immigration of foreign workers and their families. What are the problems facing the returnees? How can their modernizing influence on their societies be increased?