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The Dangers of 'Deglobalization'

Author: Jayshree Bajoria
March 16, 2009

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From construction laborers to Harvard-educated bankers, foreign workers are being forced to return home as once-booming economies around the world contract. Globally, 24 million to 52 million people could lose their jobs in 2009, according to the International Labor Organization's latest estimates. And populist sentiment and protectionist moves in countries which relied on foreign laborers during the boom years have put 200 million migrant workers internationally in the crosshairs.

Examples of the new protectionism abound: The United States enacted a law in 2009 imposing strict restrictions on hiring of skilled immigrant workers by companies receiving government bailout money. Malaysia and Saudi Arabia directed companies to lay off foreign workers first if they needed to downsize. In Britain, large-scale protests (Telegraph) were held against the use of foreign workers at an oil refinery. The Philippines reports over 5000 Filipino workers lost their jobs overseas from October 2008 to January 2009. Even Ireland is debating its liberal immigration laws which allowed for massive levels of immigration to sustain the country's economic growth since the late 1990s. In a September 2008 poll, as the country's economy faltered, 66 percent of Irish felt immigration policy should be made more restrictive (IrishTimes).

Experts dub this deglobalization. Some analysts also express fears of a reverse brain drain. Examining skilled immigrant contributions to the United States, Duke University professor Vivek Wadhwa notes immigrants founded a quarter (Issues in Science and Technology) of all U.S. engineering and technology companies between 1995 and 2005, including half of those in Silicon Valley. CFR's Matthew Slaughter says skilled immigrants can help revive the economy by creating more jobs in the United States. "Keeping them out damages us," he writes, as a co-author of a recent op-ed (WSJ). Wadhwa's research points out immigrant-founded tech companies generated $52 billion in revenue and employed 450,000 workers in 2005.

In the short term, experts worry about protectionist measures and job loss sending migrants home and curtailing levels of migration from origin to destination countries. This would result in reduced remittances which, when coupled with increased unemployment in countries of origin, prompt fears of social and political upheaval. The World Bank says global remittances are expected to fall (PDF) by 0.9 percent in 2009, but could fall by as much as 6 percent if the economic situation worsens. The International Organization for Migration also warns against the risk of rising xenophobia (PDF) "based on the false perception" that migrants steal jobs from local workers.

In the long-term, writes Stephen Castles, co-author of the book The Age of Migration, the motivation to migrate (PDF) in times of recession may be even higher than before, and remittances may prove a resilient form of international transfer. He also argues global economic inequality and the demographic imbalances between the ageing populations of the North and massive working-age people in the South remain important factors in generating future migration.

The recent fall in arrests (LAT) of illegal immigrants at the U.S.-Mexico border raises question: Will a poor labor market in developed economies deter illegal immigration? Experts appear divided. Some, in fact, think tighter immigration laws in traditional destination markets will merely strengthen black-market activity.

To respond effectively to the financial crisis, economists generally argue against rich countries barring their doors to migrants. In October 2008, UN Secretary General Ban Ki-moon stressed migration can help lift the world out of its economic crisis. "Now more than ever, politicians and policymakers need to cooperate across borders," he said. There are also demands for reforming immigration laws that do not discourage skilled labor, but at the same time secures borders. In a new interview with CFR.org, former Homeland Security Secretary Michael Chertoff says U.S. lawmakers should be preparing changes to immigration policy in anticipation of the country's economic revival. "[T]here is something to be said for getting it right now before the economy starts to grow again, and the demand for workers becomes increased," he says.

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