This course will focus on facets of globalization that affect a country´s economic perspectives and decisions. Globalization has recently been the predominant subject in many political debates, and this course will go into the determinants of globalization. It will be separated into four modules; the first module will explain exchange rates. It will cover what determines exchange rate and how different exchange rates affect the economy and the reality of currencies. The second module will explore trade, the reality of free trade, and what occurs to a country´s economy with protectionism. The third module will go into the balance of payments, it will help you understand how economic transactions between a country and the rest of the world work. The fourth module will focus on Immigration, which is probably one of the most controversial subjects today. It will explain how migration affects host countries and it will cover current migration trends.
Migration:objections and responses
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Del curso dictado por IE Business School
Trade, Immigration and Exchange Rates in a Globalized World
27 calificaciones
De la lección
(Im)migration
Conoce a los instructores
Gayle AllardProfessor
Economics
[MUSIC]
As we close this section on migration as another facet of globalization,
I'd like to just run through with you, by way of review,
some of the common objections to migration.
And the responses that we've learned in this part of the course.
One of the most common objections is that migration destroys jobs and
raises unemployment.
Now we've seen very clearly on the aggregate supply,
aggregate demand diagram.
That actually, surprisingly maybe,
this in-flow of migrants actually helps generate jobs and growth.
So that objection is not true.
A second objection would be that migration imposes a cost on the taxpayer
in the host country.
So the the local taxpayers ending up paying a lot of ,money to
support these immigrants.
And we've found that a lot of microstudies have been done of migrant groups, many
of them in the US and Mexico, but many also in the UK and other parts of Europe.
And they have found that if immigrants or migrants are legal and they find
work quickly, they end up paying in more to the public budget than they receive.
The problem is if they are illegal, in which case maybe
the onus lays on the employer who has employed them illegally,
who is actually cheating the taxpayer.
Another objection, or another common misconception, is that we should receive
skilled migrants, but we should leave the unskilled ones out.
The response to that would be, also as we saw with the aggregate supply,
aggregate demand diagram, both kinds of migrants will keep down wages,
reduce costs, it will be in different sectors.
So maybe the migrants going into the health sector will keep down health costs.
The migrants going into the tech sector will keep those sellers from going through
the roof, the migrants going to services will keep those costs down.
So it really doesn't matter whether they're skilled or
unskilled, they keep down cost and they help shift out the aggregate supply curve.
Another objection is kind of a vague objection,
is that somehow the migration is a drag on the host economy,
it's a burden on the host economy.
And here we've been able to see clearly that's not the case.
Migration helps induce growth, employment.
We've also seen that diverse societies are more creative,
more innovative, the kind of conflicts and tolerance possibly,
and new ideas that they experience help them to be that way.
Also consumer spending is raised in the host economy, and so they are not a drag,
they would be a stimulus to the host economy.
And then another common statement is that if you would
just restrict immigration, you could leave the host country better off.
It would be better for all of you.
And obviously this statement is not founded in fact.
In fact, it's highly unlikely that we would be better off if
we stopped immigration.
If we deported all of the immigrants.
Maybe it would have some short-term political benefits.
But economically, it's clear for all of the reasons that we've reviewed.
That the host country will be worse off if we stop immigration, if we send them home.
There is one objection which does have a basis in fact in our discussion here,
and that is that allowing migration, inward migration,
aggravates inequality in the host country.
Now you don't usually hear that mentioned in the political debate.
But that is one of the negative aspects of it, because as the migrate comes in,
they come in at very low income levels.
They may pull down the wages of the least skilled, and so
you spread out your wage distribution or your income distribution.
So it is usually true that countries that accept a lot of immigrants
are countries with more inequality.
In these cases, as we end our discussion of trade,
what you have to do is make sure that the people who are gaining from migration,
owners of businesses, people benefiting from greater consumption,
transfer some income to those who are hurt.
In the area of migration,
one of the things suggested recently by a US economist at Harvard is
that there's another sort of impossible trinity that exists here.
This is Danny Roderick.
Instead of the impossible trinity that we talked about with currencies,
exchange rates, monetary policy and capital flows.
This impossible trinity is a triangle that has, on each of its different angles,
on one it's got migration, on one it's got globalization, and
another it's got democracy or individual freedom.
And his argument is that, as we become more and more global, as globalization or
hyper-globalization continues, as it did in the very end of the 20th century,
the beginning of the 21st, we end up sacrificing something else.
Maybe we're sacrificing some national sovereignty, in other words,
we're saying, I can't oppose immigration because our country is committed to it.
Or I can't oppose trade in its case,
because our country belongs to this trade agreement.
Or maybe you're compromising democracy.
You're saying, I can't really ask the people what they think,
because we've committed ourselves to free movement of people or
we've committed ourselves to free movements of goods.
And so as we hyper-globalize, as globalization intensifies,
we may be giving up national sovereignty, we may be giving up democracy.
And it's possible that this huge backlash against migration, which I said is sort of
a lightning rod for all of these discontents with globalization.
That all of this opposition may stem from this basic fact,
that it is hard, or maybe impossible as Roderick maintains.
To keep pursuing deeper democracy, stronger national sovereignty,
and greater or more intense globalization at the same time.
Maybe we've given something up, and people are demanding to have it back.
[MUSIC]
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