This second part of the article proposes, rather an idealistic alternative to opening up the national borders, which require the involvement of wealthier countries, to assuage the suffering of the less fortunate people. The advanced technology in the wealthy country yields higher wage for migrants while having no negative impact on the unemployment rate of the wealthier country in the long run. These gains would not only help the immigrating individuals and the home countries but also their families and friends in their home country since much of the wealth gained by those migrants is sent back to their home country in the form of remittance, which is in larger amounts and much more effective than foreign aid. It will be in the scope of the article to shed light on the limitations of my alternative as well.
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| Image Source: The Kathmandu Post |
Michael Clemens estimates the gains from removing global migration barriers could be in the range of "50 to 150 percent of world GDP" (Coyne, 2013, pp. 190-191). These gains would not only help the migrating individuals and the receiving countries but also the poor families and friends left behind. Much of the wealth gained by those who migrate is sent back to their home country in the form of remittance, which is much more effective than aid. Remittance has a large share of GDP in developing countries and has surpassed the share of foreign aid and foreign direct investment in most of the developing countries. Remittances have been found to have a number of positive effects on the developing economies. It has served as insurance policies against risks associated with new production activities and reduced income inequality, has helped low-income households to smoothen their consumption by reducing their vulnerability to adverse shocks, has increased the propensity to save, has reduced poverty, and has helped build schools and clinics (Cooray, 2012, p. 3). Remittances have also been found to promote economic growth, promote financial sector development and reduce output volatility. Different other studies support the argument that remittances promote economic growth. Several studies also show that growth rates are higher in countries with a well-developed financial sector, a high human capital stock, and well-developed infrastructure. Studies further support the argument that remittances have contributed to financing education and promoting financial sector development. Therefore, high-remittance receiving countries with comparatively better developed physical and human capital stocks, and financial systems should be able to successfully channel remittance flows towards economic growth (Ibid, p.4). Unlike Foreign Aid, remittance reaches the families and the families will invest it in investment as well as consumption sector.
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| Image Source: The Kathmandu Post |
Although much more modest in potential gains, Coyne also supports trade facilitation and elimination of all trade barriers such as tariffs and quotas. The Centre d'Etudes Prospectives et d'Informations Internationales (CEPII) has estimated that trade liberalization in conjunction with trade facilitation could have worldwide gains of more than $550 billion, or about .8% of world GDP (European Commission, 2006). These estimated gains from open immigration, trade facilitation, and free trade are extremely attractive because they hold great potential for both the poorest and the richest of the world.
