B10 - Trading labour: a dilemma for migration regimes

Summary

While international migration is an old phenomenon, its link with trade is a recent one. Earlier trade economists were of the view that trade in products could be a perfect substitute for trade in capital and labour. However, with increasing industrialization and the importance of services sector-led growth, it has become apparent that trade in factors of production can complement trade in goods, in which case freeing both would yield greater gains. Evidence also suggests that the greatest gains have come to countries that opened both. These developments are proving to provide win–win solutions to both exporting countries and importing countries, but political dimensions often queer the pitch.

Global trade and investment have spin-off effects on labour mobility. Reinforcing these developments, communication technology and modern transportation systems offer faster mobility. Consequently, our world is undergoing substantial spatial transformations, at a pace faster than anybody could predict. Trade expedites movement of labour both nationally and internationally. Internal migration is towards cities and towns, drawing surplus labour from rural to urban, motivated by opportunities to climb up the economic ladder. Such agglomerations throw up an immense amount of opportunities for businesses as they become ‘thick markets’, act as incubators for innovation and provide access to a wide range of consumables which otherwise could not be imagined of.

Along with internal relocation to urban centres, incidence of cross-border and intercontinental migration has increased manifoldly. Unlike uncontrolled intra-national migration, stringent migration policy regimes are in place controlling international migration.