Friday, April 05, 2013

Talent Geopolitics: Ironic Migration

Yesterday, on Al Jazeera, I discussed the topic of reverse migration. You can watch the show online. The dominant patterns of global migration are changing. Saying the direction of flows are flip-flopping (i.e. reversing) isn't accurate. The term "ironic migration" is more apt.

Return migration isn't inherently ironic. Going home after seeing the world is an old story. Reverse migration is news because it is ironic. Why are people moving from Spain to Mexico, as opposed to Germany? The legal barrier of entry is much lower within the European Union. Germany is one of the largest economies in the world. Germans are among the wealthiest. The rational choice is clear. From the latest issue of the  Economist:

These days culinary ideas flow both ways. Mexico City is full of Spanish tapas bars. New Portuguese bakeries are springing up in São Paulo. Even American eateries are proliferating south of the border. The reason is that Latin America has become a destination as well as departure point for enterprising migrants.

As rich countries stagnate, they cease to be magnets for mobile hands and brains. Net migration from Mexico to the United States has fallen to roughly zero. In Spain, where more than half of young people are unemployed, the number emigrating each year to Latin America trebled in the five years to 2011. “Necessity has made them overcome the fear of moving abroad for work,” says Juan José Ribas, a Spaniard based in Costa Rica as regional head of Barceló, a Spanish travel company with 29 hotels in Latin America. Barceló now gets so many job inquiries from Spanish would-be émigrés that it no longer has to advertise its Latin American vacancies, Mr Ribas says.

In Portugal, where the economy shrank in four of the past five years, a generation of young Magellans has set off seeking work. Brazil now admits more immigrants (legal ones, at least) from Europe and the United States than from Latin America. Remittances from Brazil to Portugal are greater than those from Portugal to Brazil, says the World Bank. The same is true between Mexico and Spain. Spaniards in Argentina send home more than $1 billion a year, four times the amount that flows in the other direction. ...

... Even so, Latin firms would still benefit from easy access to foreign talent, knowledge and connections. Alas, many governments make hiring foreigners difficult. It can take six months to get a Brazilian visa. UBS has been waiting months to transfer a Portuguese analyst to its São Paulo offices, and was unable to transfer a Danish employee to Brazil because the financial-services exam can be sat only in Portuguese. Inefficient ports and high customs duties make relocation expensive. Once in, it is difficult to leave Brazil: departing expats must be prepared to submit to an inspection of their possessions to check that no cultural patrimony is being stolen. The government recently announced speedier visas for IT workers. For everyone else the process remains painful.

Even Mexico, a tenth of whose citizens live abroad and whose economy is more open than that of any other country its size, remains atavistically touchy about outsiders. Foreigners cannot buy property along its borders or coast (national security, you understand), or invest in certain industries. Oil remains in the ground because gringos are barred from investing in extracting it. Even foreign-born Mexican citizens cannot serve in the cabinet.

It is not surprising that Latin America is bad at managing immigration: for years it has had little to deal with. Whereas 13% of people in the United States and Britain were born abroad, in Mexico the figure is less than 1%. In Brazil it is 0.3%. As Latin America booms, its foreign-born population will swell. Employing clever foreigners will help its firms thrive.

The parts of the passage I've highlighted are the main takeaways from yesterday's show. Ironic migration links two places that previously didn't have a connection. Via brain drain, Spain is in a better position to benefit from the growth in Mexico. We expect some return migration. You go where you know.

Also, the ironic migration still pales in comparison to the usual flows (e.g. to the United States). But the economic impact is substantial. The new destinations for talent are receiving the best kind of economic stimulus. In this sense, ironic migration is a leading (as opposed to lagging) indicator.

Talent leaving New York City for Sao Paulo is shocking. Economic globalization is converging. The world is getting flatter. The end of geography is nigh.


Randy McDonald said...

It's not so unusual. Migration from southern Europe to Latin America continued into the 1960s in some cases, and never disappeared entirely. In the first half of the 20th century, these countries were quite competitive internationally. Recent growth in Latin America--not just the Southern Cone--and decline in southern Europe once again makes Latin America worthwhile, at least for southern Europeans with needed skills and/or connections.

Jim Russell said...


I appreciate the reminder. These pathways of migration don't drop out of the sky. There's almost always a history there. Cheers.

The Urbanophile said...

Jim, congrats on the TV appearance!