The economic role of migrants in the production of tradeables and nontradeables: the case of Austria (original) (raw)

Globalisation has been associated with increased international mobility of capital but, partly due to legal restrictions, it is not often associated with labour mobility. However, free labour mobility and free trade are substitutes in respect of tradeable goods and services. The Austrian migration system channels migrants into industries which produce tradeables, e.g. manufacturing with a low capital to labour ratio, in particular, labour intensive industries like clothing, leather and textiles; and also into activities which are non-tradeables, e.g. tourism, construction and personal, health and domestic services. In the course of the 1990s, the rise in labour mobility lagged as industries employing a high proportion of migrants in the production of tradeable goods declined behind the growth in international trade of goods and services. Technological developments, the reduction in transport costs as well as improved processes for the production capacities of less developed trading partners resulted in a shift in the production of tradeable goods. The structure of migrant labour changed as a consequence and labour mobility lost momentum. Physical labour mobility is necessary only where services are linked directly to the consumers, for example, nursing or tourism industry, or where a particular type of labour is linked to direct capital investment, for example, highly skilled labour which move with multinational companies. Recent developments especially in communications technology, tend to promote mobility of services without the need for labour mobility. As long as capital, technology and managerial skills are mobile, labour may remain in the country of origin, e.g. in the case of Indian computer programmers. Both labour mobility and trade in goods and services will tend to produce a convergence in the pay rates of the countries concerned. (Heckscher-Ohlin) Therefore, forces which promote international movement of goods and services, may be expected to produce a tendency for convergence of pay rates even without a movement of labour. BIFFL, Gudrun Globalisation, trade and migration: an introductory note Globalisation has been associated with increased international mobility of capital but less so of labour (Solimano, 2001). This may be the result of a general notion that commodity trade is in the main a winwin situation, and migration as giving rise to increased inequalities, of producing winners and losers. This view is promoted by the fact that countries tend to impose restrictions on labour mobility while at the same time removing barriers to the free flow of goods and services across borders (GATS) thus discriminating against labour mobility in favour of international trade. This may be a contributory factor to the rising number of illegal migrants who endeavour to improve their economic situation by migrating even if it means working in the informal sector (Ghosh, 1998/99). The existence of informal sector production of goods and services and the creation of jobs and incomes in the non-observed economy, both in developing and developed countries (OECD, 2002, ILO, 2002) 1 , may thus promote illegal migration. The practice for official statistics to include only flows of goods, services and workers in the formal sector, gives international trade a higher weight than warranted. (Biffl, 1999A, 2002) Nonetheless, the general picture is reasonably accurate. This raises the question whether the policy assumption that trade and migration have different impacts on economic growth, the labour market, prices and income distribution is valid, despite the theoretical proposition that they are in the main substitutes and thus can be expected to have similar impacts. If the latter is true, the encouragement of a freer movement of labour for humanitarian and social reasons-illegal migrants are not subject to the legal and social protection of regular migrants-can be justified on economic grounds. Another question to be followed up is the impact on the composition and growth rate of international trade and labour migration, of the transfer of different parts of the production and distribution process