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The influence of international migration on international trade
Section 6. World economy
Huseynova Sara Mubariz, Assistant of professor faculty of International relations and economy, Baku State University E-mail: [email protected]
The influence of international migration on international trade
Abstract: International trade and migration are two important dimensions of globalization. Although governments have been very willing to open their borders to trade, they have not been so liberal in their immigration policies. It has been suggested, however, that a causal positive link might exist between immigration and trade. Negotiations would provide a justification for our failure to adopt more liberal immigration laws. Whereas in an ideal world we might adopt more efficient laws, we currently live in a highly nonideal world in which other governments discriminate against our nationals (in their goods markets, service markets, labor markets, or capital markets). Given this reality, we may use costly policies as bargaining chips, offering to reform our protectionist policies in exchange for liberalizing reforms by other governments that discriminate against our nationals. Reforms implemented through a multilateral agreement would allow each participant to increase its national economic welfare while improving global economic welfare.
Keywords: Migration, economic, international trade, liberalization.
Migration is one of the most constant social and gration. The relevance ofthese interdependencies for trade
economic processes. It has existed throughout history, and its presence gives rise to new concerns in the light of the different perceptions of reality that we have today. Today, migratory flows continue to be a worldwide reality, and this phenomenon keeps growing, creating different implications for the international community.
Migration is a feature of social and economic life across many countries, but the profile of migrant populations varies considerably. In part this is because of the variety of sources of migration. In much of Europe, for example, citizens enjoy extensive rights to free movement. In Australia, Canada and New Zealand, managed labour migration plays an important role. Other sources include family and humanitarian migration. Whatever its source, migration has important impacts on our societies, and these can be controversial. The economic impact of migration is no exception.
Despite large potential economic gains to the countries concerned, bilateral and multilateral negotiations regarding liberalization of migration have not had the high profile of trade negotiations and agreements. Migration and trade have been traditionally the prerogative of different ministries, yet there are many interdependencies between international trade, foreign investment and mi-
negotiations has been remarkably ignored in the literature. In this paper we therefore focus on the two-way interaction between international migration and agreements designed to enhance cross-border trade or investment. Liberalization of international trade in services and the movement of people are likely to offer much more significant economic gains than liberalization of remaining barriers to goods trade. However, progress within multilateral frameworks is fraught with difficulty. Mode IV ofGATS is restricted to temporary movement of service employees and has yielded little progress so far. Negotiations within more flexible unilateral and bilateral frameworks are likely to be more successful in liberalizing the movement of labour. We discuss several specific examples and conclude that trade negotiations are increasingly accommodating migration policies that favour temporary migration over permanent migration and that the migration regulatory framework is likely to be further linked to trade and investment over time [1, 435].
In this context, it is useful to point out that GATS is unlikely to have a major impact on immigration policy for several reasons. Firstly, GATS is only concerned with temporary movement. Secondly, the Most Favoured Nation (MFN) clause is unlikely to be acceptable to
Section 6. World economy
countries in this context. Under MFN, discrimination between trading partners is not allowed and any more favourable concessions granted must be extended to other WTO members. Thirdly, once agreements are made, these are difficult to reverse and countries will wish to maintain flexibility to adjust future immigration policy in response to changing domestic conditions. Nonetheless, it is likely that developing countries will increasingly seek access to developed country labour markets as a condition for opening their own markets to goods trade and professional services. Such negotiations are more likely to be on a bilateral than multilateral basis. There may also be increasing pressure to cover permanent labour movements, since some temporary work policies are already covered under existing arrangements.
Progress on linking trade and migration agreements seems likely to remain slow. It can be argued that trade is predominantly about short-run material consumption whereas migration generates a range of externalities over a long period of time (Greenaway and Nelson 2006) and people are generally more pro-trade than pro-immigration (Mayda 2007). Concerns about adverse labour market impacts for particular groups of native workers, concerns that immigrants may impose net burdens on public finances, as well as possible social and political aversion to increasing immigration are unlikely to diminish soon, particularly in the current global economic downturn [1, 450].
Moreover, a key impediment to liberalization of migration may be the lack of a basis for reciprocity in negotiations (Hatton 2007). Labour-exporting countries may be keen to lower the barriers to the movement of their workers, however, such countries typically have asymmetrical policies. Developing countries that may encourage the emigration of their citizens are not always themselves open to immigrants from elsewhere. There needs to be greater awareness that trade, competitiveness and employment policies are 'inextricably tied into migration to a degree beyond what existed before the expansion of globalization' (Keely 2003). However, the counter argument is that multilateral trade negotiations have a more than 50 year history, while migration has typically been a national policy issue. Furthermore, the 23 movement of people raises a host of additional challenges, including social and cultural integration, that trade agreements may not be well positioned to address. Nonetheless, increasing demographic pressures may open countries to more serious discussions on migration agreements [2, 129]. For example, as the Japanese economy finds itself increasingly short of unskilled work-
ers (given its rapidly ageing population) it may consider options that were previously unpalatable. Interestingly, the movement of natural persons was included as a 'major element' in draft agreements between Japan and the Philippines and Thailand (Yamagata 2006). The largest gains are likely to be from allowing labour mobility between very diverse countries (Winters 2003). In order to help maximize the benefits and minimize the problems caused by the trans-border movement of people, Pasquetti (2006) argues that multilateral regulation is necessary at a global scale. That is, a case can be made for a 'World Migration Organization' (WMO) alongside the WTO. However, as noted earlier, Hatton (2007) argues that international migration is driven by absolute rather than comparative advantage. Hatton therefore suggests and there is 'no basis for WTO-style negotiations over migration and therefore no grounds for reforming the international architecture in the hope of fostering liberalization' [2, 148].
Therefore, although large potential gains from liberalizing migration may be possible through improved cooperation along the lines of what the WTO has done for trade, this is not likely to happen, unless a specific way forward can be forged. Bilateral or regional approaches may serve to build trust, certainty and improved management schemes that could later act as stepping stones to multilateral deals. Again, this emphasizes the complex and interacting dynamic linkages that negotiators will need to be able to deal with effectively. Countries will typically prefer the flexibility to choose the conditions and countries from which labour may flow and they may be reluctant to agree to the WTO principle of MFN treatment. Therefore regional agreements appear particularly important and they are of course increasing dramatically in relevance even for trade negotiations, given the current setbacks for the WTO negotiations [3, 74]. Nonetheless, regional arrangements will bring their own set ofproblems which are well-documented in the international trade literature. The current state of the economic environment in both origin and destination countries tends to determine the key areas of opportunity and concern. Comparative advantage arises with differences between economies, leading to important gains from trade and possibly even greater gains from the movement of people. In cases where access to the domestic labour market is negotiated as part of bilateral foreign policy initiatives, it should be kept in mind that a quantitative assessment of the impact requires the use of a large scale model that brings the myriad influences together.
Development strategy of the national tax system under the conditions of global instability
Finally, the policies described above would maximize the total economic benefits for natives from immigration. While I have addressed how to maximize the total wealth of natives, I have not addressed the distribution of that wealth among natives. Immigration not only expands wealth, but also can have important distributive effects. Those natives who must compete with immigrants in the labor market may find that immigration reduces their real income.
We must emphasize that from the policy perspective these issues cannot be fully addressed within a purely economic framework. In this paper we noted the paradox of diversity. Economic theory suggests that the economic benefits of opening up borders to trade or immigration
are at their largest, the more different the countries are. In addition, greater labour mobility helps to facilitate trade and increases the cross-border demand for domestic output. As noted earlier, some even argue that from the perspective of trade, economic assimilation of immigrants is not as desirable as the nurturing of cultural diversity. From the social perspective, however, it has become clear that social cohesion and the accumulation of social capital are not natural outcomes in increasingly diverse societies, but require resources to be allocated to the promotion of desirable social outcomes. Thus, the social evaluation of greater cross-border mobility resulting from greater international economic integration must go hand in hand with the economic assessment.
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Kucherova Iryna Mykolayivna, PhD in Economics, external scholar, Institute of International Relations, Taras Shevchenko National University of Kyiv E-mail: [email protected]
Development strategy of the national tax system under the conditions of global instability
Abstract: The article deals with aspects of modern world economic development and instability factors characteristic of the modern system of global economic relations. Analyzes the global economic factors that affect the national tax policy and determine the direction of modification of national tax systems. Keywords: global economic factors, national tax system, tax revenues, tax harmonization.
