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.