Don­ald Trump’s for­eign ad­mir­ers

Financial Mirror (Cyprus) - - FRONT PAGE -

Don­ald Trump doesn’t like Latin Amer­i­cans and ad­vo­cates build­ing a wall to sep­a­rate them from the United States. As usual with such snubs, Latin Amer­i­cans tend to re­cip­ro­cate the sen­ti­ment, as do Mus­lims and oth­ers who feel af­fronted by the Repub­li­can Party’s pres­i­den­tial nom­i­nee. But many of those who dis­like Trump share his pas­sion for re­stric­tive im­mi­gra­tion poli­cies.

There are prob­a­bly few ar­eas of pub­lic pol­icy where some­thing that is so good for so­ci­ety is por­trayed as be­ing so bad. Of course, pro­ject­ing a so­ci­ety’s prob­lems onto for­eign scape­goats is an old po­lit­i­cal tac­tic. But the ex­tent to which hos­til­ity to im­mi­gra­tion goes against the ev­i­dence of its salu­tary ef­fects is sur­pris­ing.

Re­cent re­search on im­mi­gra­tion shows very large pos­i­tive ef­fects on the wel­fare of lo­cals. Bill and Sari Kerr have shown that, while im­mi­grants rep­re­sent about 13% of the US pop­u­la­tion, they ac­count for 26% of all en­trepreneurs, and about 36% of new firms have at least one im­mi­grant in the lead­er­ship team. This sug­gests that im­mi­gra­tion is a large part of the story be­hind Amer­i­can eco­nomic vi­tal­ity and job cre­ation.

This is not a uniquely Amer­i­can phe­nom­e­non. On the con­trary, it’s pretty univer­sal. In Chile, im­mi­grants from non-neigh­bour­ing coun­tries are four times more likely to be en­trepreneurs than na­tives. In Venezuela, Ital­ian, Span­ish, and Por­tuguese im­mi­grants, who moved there mostly in the 1950s and 1960s, and whose level of for­mal school­ing was lower than that of the na­tives, were ten times more likely to be en­trepreneurs. To­day, Al­ba­ni­ans re­turn­ing to their coun­try from Greece af­ter the 2010 cri­sis there be­came en­trepreneurs and in­creased the em­ploy­ment and wages of those who never left, as shown by Har­vard’s Lju­bica Nedelkoska.

In on­go­ing re­search with Juan José Obach, we found that Pana­ma­ni­ans who work in in­dus­tries and re­gions with more for­eign­ers earn sig­nif­i­cantly more than those who work where for­eign­ers are less preva­lent. This in­di­cates that it is in the in­ter­est of the lo­cals to have more for­eign­ers around. Dany Ba­har of the Brook­ings In­sti­tu­tion and Hil­lel Rapoport of the Paris School of Eco­nom­ics have found that coun­tries’ com­par­a­tive ad­van­tage evolves to­ward that of their mi­grants’ coun­tries of ori­gin: the new coun­try be­comes good at pro­duc­ing what the old coun­try suc­cess­fully makes.

The dif­fer­ence is that, in gen­eral, many de­vel­op­ing coun­tries have more re­stric­tive im­mi­gra­tion and for­eign em­ploy­ment poli­cies than the US does. Such poli­cies also have larger neg­a­tive ef­fects on mi­gra­tion, be­cause th­ese coun­tries are not the most at­trac­tive des­ti­na­tions to be­gin with.

Con­sider Chile, one of Latin Amer­ica’s rich­est and ar­guably most suc­cess­ful coun­tries, which likes to compare it­self to Aus­tralia, New Zealand, and Canada, well-run coun­tries that are rich in nat­u­ral re­sources. But now Chile is in a rut: it is not catch­ing up with richer coun­tries, and it is hav­ing trou­ble di­ver­si­fy­ing its econ­omy.

As it pon­ders why, it would ben­e­fit from com­par­ing it­self to its role mod­els in terms of the pro­por­tion of the pop­u­la­tion that is for­eign-born. In Chile, it is less than 2%. In Aus­tralia, New Zealand, and Canada, it is 27%, 28%, and 20%, re­spec­tively, a con­se­quence in part of th­ese coun­tries’ ac­tivist im­mi­gra­tion poli­cies.

Ac­tivist poli­cies were also be­hind the al­most one mil­lion Soviet Jews that Is­rael at­tracted in the early 1990s, rep­re­sent­ing 12% of the Is­raeli pop­u­la­tion. Stud­ies have shown that this huge ex­per­i­ment had very large pos­i­tive ef­fects on the econ­omy and on skilled lo­cals.

The miss­ing im­mi­grants in Chile can help ex­plain the dearth of en­trepreneur­ship, in­no­va­tion, and di­ver­si­fi­ca­tion. The few Kore­ans that Chile let in helped re­vive its tex­tile in­dus­try.

Colom­bia is much worse than Chile in this re­gard. There, for­eign­ers rep­re­sent less than 0.3% of the pop­u­la­tion; in­deed, there are more than 15 Colom­bians liv­ing abroad for ev­ery for­eigner liv­ing in the coun­try.

Are the ex­tremely low lev­els of im­mi­gra­tion in Chile and Colom­bia a prob­lem of low for­eign de­mand or high do­mes­tic bar­ri­ers? This ques­tion can be an­swered by study­ing a very sad on­go­ing nat­u­ral ex­per­i­ment: the mas­sive em­i­gra­tion from Venezuela, ow­ing to the coun­try’s cat­a­strophic eco­nomic and so­cial im­plo­sion.

Venezue­lans, in­clud­ing the most tal­ented, have been try­ing to find places to go. You would be mis­taken if you imag­ined that bu­reau­crats in Chile and Colom­bia had more im­por­tant things to do than re­strict­ing i mmi­gra­tion. Both coun­tries have been let­ting very few Venezue­lans en­ter, pro­por­tion­ally fewer than Costa Rica, Panama, Canada, Spain, Aus­tralia, and the United States, coun­tries that are at both ends of Chile and Colom­bia in terms of in­come or skill level.

Colom­bia, for ex­am­ple, has sus­pended a Mer­co­sur-based visa mech­a­nism for Venezue­lans on the grounds that Venezuela does not re­cip­ro­cate. This de­ci­sion is not just heart­less; it is patently self-de­struc­tive, for it as­sumes that Colom­bia is ex­chang­ing Venezuela’s ac­cess to its coun­try for ac­cess by Colom­bians to Venezuela. But the ben­e­fits to Colom­bia come from the skills, en­trepreneur­ship, and di­ver­sity it at­tracts, not from the ones it lets go. And who would want to go to Venezuela th­ese days, any­way? In­vok­ing rec­i­proc­ity is non­sense wor­thy of Trump.

The prob­lem of bad im­mi­gra­tion poli­cies is not lim­ited to Latin Amer­ica. South Africa, for ex­am­ple, would ben­e­fit enor­mously from re­lax­ing its skills and en­trepreneur­ship con­straints through more lib­eral im­mi­gra­tion poli­cies. But the coun­try has in­stead moved in ex­actly the op­po­site di­rec­tion.

The im­mi­gra­tion poli­cies that Trump wants for the US bear an eerie re­sem­blance to the poli­cies adopted in the coun­tries he dis­likes and that dis­like him. If adopted, Trump would most likely seek new scape­goats. But the cur­rent scape­goats should learn to dis­like their own im­mi­gra­tion poli­cies as much as they ap­pear to dis­like Trump.

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