Resource information
Global capitalism, vintage early 21st
century, favors the movement of goods and capital across
national borders more than it does the movement of people.
It was not always this way. The first wave of globalization,
in the second half of the 19th century and the early 20th,
came with massive international migration. Around 60 million
people migrated from Europe to the countries of the New
World (Argentina, Australia, Brazil, Canada, and the United
States) over a period of 40 years or so. In a sense, current
globalization has a smaller degree of "cosmopolitan
liberalism" in the dimension of international
migration. While there is consensus on the benefits of an
open trade regime and relatively liberal capital movements,
that consensus rarely extends to the free movement of
people. Solimano examines this difference in the
"freedom to become global" by looking at both
standard trade theory, basically the Mundell theorem of
trade and migration as substitutes, and the ensuing
analytical developments and empirical evidence around the
Mundell result. He then looks at this asymmetry in
today's global economic order from the perspective of
freedom, individual rights, and transnational citizenship,
as well as the potential of international migration to
reduce global inequality. Preventing factor (labor or human
capital) movements from lower- to higher-productivity
activities (countries) may entail a global welfare loss in
terms of forgone world output (although the distributive
consequences for sending and receiving countries vary).
International migration tends to reduce income disparities
across countries. But it can increase inequality within
labor-scarce receiving countries by moderating the growth of
wages, because of the associated increase in the supply of
labor. In contrast, in sending countries emigration can have
an equalizing effect by reducing the supply of labor and
raising wages. Still, international migration is bound to
have a positive effect on long-run growth in receiving
countries by keeping labor costs down, increasing the
profitability of investment, and raising national savings.
For sending countries, the impact on growth depends on the
pool of labor and human resources that emigrate. In
labor-abundant developing countries with chronic
unemployment (or labor surplus), the growth-depressing
effects of emigration can be small (compensated in part by
labor remittances). Nevertheless, the emigration of highly
educated people, professionals, and national investors can
have a detrimental effect on long-run income levels and
growth rates for sending countries. From a global
perspective, however, world output would be expected to
increase if people could freely move across the planet from
areas of low labor productivity to areas of high labor
productivity. From the viewpoint of global economic
freedoms, the result would be equally positive.
