|
|
|
|
The OECD Observer
October/November 1998, No. 214
North America: migration and economic integration
By Jean-Pierre Garson
Liberalisation of trade in goods and services and increased investment can speed up development in countries of emigration and thus help to regulate migration flows. But should the free movement of persons proceed in parallel with the different stages of regional economic integration? Or should it become an objective only when economic convergence is more advanced?
The relationship between migration and economic integration was one of the most debated topics at the seminar on Migration, Free Trade and Regional Integration in North America held recently in Mexico City by the OECD and the Mexican authorities with the support of Canada and the United States. (Migration, Free Trade and Regional Integration in North America (http://www.oecd.org/scripts/publications/bookshop/redirect.asp?811998121P1), OECD Publications, Paris, 1998.)
Three levels of regional integration have been identified, whose effects in terms of economic catch-up, inward direct investment, job creation and international migration are not the same.
At the first level is the extensive free trade agreement without full liberalisation of factor flows. The North American Free Trade Agreement (NAFTA) is an example, as are the EU free trade agreements with non-member Mediterranean countries. The second level of integration involves agreements to enlarge existing regional blocs to include peripheral countries. At this level, new members receive budget transfers, but barriers to labour mobility are maintained. This is the case with the European Union’s extension to certain countries of central and eastern Europe. The third level is full economic and monetary integration of member countries—the next stage of European economic and monetary union (EMU), for example—including full freedom of movement and establishment within the area.
The effects of economic convergence on migration, and on factor mobility generally, varies according to the level of regional integration. In the case of the EU, economic and monetary union explicitly provides for the free movement of persons and therefore of labour. However, labour mobility within the area tends to remain low, or at any rate, lower than capital mobility. EU nationals represent less than half of the foreign labour force in all the countries of the Union except Belgium, Ireland and Luxembourg. In the case of NAFTA, the tendency towards economic convergence has not been paralleled by a liberalisation of migration.
Economic convergence and migrations
The case of the European Union shows that the political will to establish, in stages, an area for free movement of goods, services and capital can help the economic integration of less advanced countries. Free movement of persons was a key part of integration and came prior to establishment of the single currency. In fact, it was introduced in a general context of reversed migration flows, as in the case of Spain (Figure 1) and Greece. Thus the reduction of migration flows appears not so much to be the result of institutional decisions to liberalise trade in order to stem migration with counter flows of goods and capital (NAFTA, Euro-Mediterranean agreements), as the outcome of economic development and technological catch-up brought about regional integration.
The absence of free movement as a formal policy of a regional bloc is not a barrier to migration from one country to another within that bloc. The United States and Canada continue each year to take in very large numbers of new permanent immigrants (mainly from Mexico in the case of the United States). Although this migration has already contributed to regional economic integration, it has not had sufficient impact to accelerate the convergence of Mexico’s economy with those of the other two NAFTA countries. GDP per capita in Canada and the United States is still respectively six and eight times higher than in Mexico. Freeing up labour movements is still one of the main issues to be considered in the context of a deepening of NAFTA, and it will be an important part of the process of accession to the European Union of the Czech Republic, Cyprus, Estonia, Hungary, Poland and Slovenia over the coming years.
Free movement of persons
So is free movement an essential factor in accelerating economic convergence and integration in a free trade area? The answer depends on the scale of migration in the period leading up to the area’s establishment. In the case of NAFTA, for example, the key feature of movements between member countries was, and still is, the predominance of flows from Mexico to the United States. In 1950 accredited Mexican workers represented 0.5% of the US labour force. By 1990 the figure was around 4% (compared with 15% for Algerians in France and 30% for Turks in Germany). In some geographical areas and economic sectors the figure was much higher. The asymmetric character of labour movements between the United States and Mexico demonstrates the mutual dependence of these two NAFTA countries on migration within the bloc.
NAFTA’s emphasis on liberalisation of trade and capital movements, without reference to the free movement of workers, may be interpreted in one of two ways. Either it reflects the signatory countries’ determination to prevent the sensitive issue of migration from inhibiting the development of economic and financial integration, in particular between the United States and Mexico. Or it implies that one of the objectives of trade liberalisation under NAFTA is to lessen the incentive to emigrate from Mexico to the other two countries.
The first interpretation seems more plausible. In practice, the determinants of international migration are partly immune to the substitution effects predicted by international trade theory. The turnaround of migration flows in some countries (Greece and Spain, for example) took place well before trade barriers had been dismantled. In the case of relations between the United States and Mexico, trade intensity is high but the reversal of migration flows has not yet begun (Figure 2). The turnaround when it happens will be determined not by trade, but by economic development and catch-up in Mexico, the effectiveness of its public and financial institutions, the introduction of labour-force training and upskilling programmes, and a massive inflow of foreign direct investment (including from emigrants abroad) to sustain growth.
Although the absence of free movement is not an obstacle to regional economic integration, free movement should remain an objective for the longer term, when economic convergence has progressed further. In the meantime, free trade agreements should be complemented by a positive migration policy, whose primary objective would be to discourage unauthorised immigration and regulate flows within the free trade area. One step might be to grant legal immigrant workers the same status as that afforded to host country nationals. That presupposes stepping up co-operation between the countries concerned to combat trafficking and the employment of illegal immigrants.
OECD Bibliography
Migrations, libre-échange et intégration régionale dans le Bassin méditerranéen (French only), forthcoming 1998
Migration, Free Trade and Regional Integration in North America, 1998
Economic Surveys: United States 1996–97, 1997
(http://www.oecd.org/eco/surv/esu-usa.htm)
Peter Jarrett, ‘The United States – Immigration’, The OECD Observer, No. 209, December 1997/January 1998
(http://www.oecd.org/publications/observer/209/obs209e.htm)
Migration, Free Trade and Regional Integration in Central and Eastern Europe, OECD/WIFO, 1997
Jean-Pierre Garson, ‘Opening Mediterranean Trade and Migration’, The OECD Observer, No. 209, December 1997/January 1998.
(http://www.oecd.org/publications/observer/209/obs209e.htm)
Jean-Pierre Garson: OECD Directorate for Education, Employment, Labour and Social Affairs