The Business Case for Immigration: How Immigration and Immigrants Help the Economy

The Backlash against Immigration

The issue of immigration has been in the news lately for all the wrong reasons. Starting with the Brexit Referendum and continuing with the election of President Trump and including the rise of populism and far right nationalism in Europe, Immigration and Immigrants are being viewed negatively.

Indeed, the prevailing atmosphere against Immigration has become so vitiated that potential immigrants from Asia and Africa as well as Latin America are thinking twice before rushing to the United States and Europe in the manner that they used to do earlier.

However, it is not necessarily the case that Immigration and Immigrants are bad for the host country since there is a strong business case to be made for the same.

The Business Case for Immigration

Indeed, the fact that the Western Economies are in the midst of stagnant population growth means that immigrants can be a source of labor for those countries where the population of the natives is dwindling.

On the other hand, this is precisely the reason why many Nationalists and Populists on the Right want to discourage immigration since they feel that their countries would be “taken over” by “hordes of immigrants” who would not only deny jobs to the locals but would also cause severe social problems to do with integration and assimilation.

Having said that, as mentioned earlier, there is a strong business case to be made for immigration.

To start with, immigrants contribute to the economies of the host countries by providing labor that is not only cheap but also abundant.

Considering the fact that immigrants often work for lower wages than native workers, businesses tend to gain and profit from immigration. In addition, immigrants can help fill crucial positions in occupations that do not have much demand from the native workers.

Examples of How Immigration Can Help

For instance, sectors such as construction and manufacturing have many low paid positions that can be filled by immigrants. Indeed, the fact that native workers usually balk at working in menial and low paid jobs means that immigrants who are ready to work in these sectors can help the economy.

To take examples, all the Gulf Countries have benefited from Asian workers who were immigrants and who literally as well as figuratively helped build the mansions and offices of the natives with their sweat and labor.

This is also the case in Europe where there is a shortage of workers prepared to drive taxis or be plumbers and electricians and where Eastern European immigrants can be found in large numbers.

Immigration at the Higher End

While cheap and abundant labor is one reason why there is a strong business case for immigration, there is also a compelling reason at the higher end of the skills spectrum. To explain, the United States has benefited immensely from highly skilled Doctors and Engineers as well as Scientists from Asia (especially China and India) wherein the Tech and the Life Sciences as well as the Engineering field have all benefited from the influx of such highly skilled immigrants.

Indeed, the reason why the United States encouraged massive immigration in the 1990s is mainly because the Tech companies such as Microsoft often found that American universities were finding it hard to churn out as many Engineers and Programmers as the Tech Industry wanted.

Thus, the solution was to encourage immigration from regions worldwide where there was a surplus of such workers. The fact that most Silicon Valley firms now have Chinese and Indians in senior and leadership positions is indicative of the fact that there is a strong economic case for immigration despite the nationalists and the populists claiming otherwise.

Need for a Rational Debate

After considering these aspects, it is indeed the case that the West must first have a debate over immigration in a rational and cool manner wherein the economic and the social costs are calculated and weighed against the benefits.

While it would be prudent to limit immigration in some sectors such as Manufacturing where the natives are at risk of losing their jobs, it is also the case that there must be a blanket ban on immigration.

As mentioned earlier, in countries where there are not enough workers, it makes sense to let immigrants do the job instead of losing competitiveness due to wrongheaded policies. In addition, in sectors or occupations where immigrants have the skills and the expertise better than the natives, it also makes sense to let the former do the jobs.

After all, the United States is what it is and where it is due to immigrants who arrived there initially as well as throughout the centuries to seek their fortunes there. While the case of Europe is different, it is a fact that Germany has been encouraging immigration partly from humanitarian impulses and more so due to the declining numbers of ethnic workers in some occupations.

Conclusion

On balance, it would seem there is a strong economic aspect of immigration that can help the host countries more than it harms them. Therefore, it is the need of the hour for the business sector to take a stronger stand against the growing chorus for keeping out immigrants and immigration.

In the same manner in which Tech leaders such as Bill Gates lobbied the government in the 1990s, the present Captains of Industry too must rise to the occasion and call for a meaningful assessment of the costs as well as the benefits of immigration.

To conclude, blanket bans on immigration do not serve anybody’s purpose and would only cause economic pain.



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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.


Managerial Economics