Is Migration Changing Global Economies - Analyzing its Effects

Since the beginning of time, people have always moved from their native homes to other regions for different reasons. Some do it to escape the conditions in their native homes, e.g., those fleeing war, while others do it to seek a better life, e.g., access to good schools. Whatever the reason for the move, it has an economic impact on the host country. In this guide, take a look at the key reasons people make this move, the current global numbers, and how this affects the host countries.

The Numbers Speak for Themselves

Global migration trends have witnessed a huge jump in the last six decades. Consider these figures:

1960: 77 million.
1990: 153 million.
2020: 281 million.

Judging by these figures, the jump from 1960 to 1990 was almost 100%, while that between 1990 and 2020 was about 85%. Statisticians have predicted that the numbers will keep growing. Interestingly, this global trend has also affected regional numbers.

Take the US as an example and consider its average number of admitted immigrants over the years.

1950 - 1960: 250,000 per year.
1960 - 1970: 330,000 per year.
1970 - 1980: 450,000 per year.
1980 - 1990: 735,000 per year.

This number has been growing steadily in the past few decades. By 2020, the country was admitting at least one million migrants annually - this number is expected to grow even higher. The US is not alone.

Europe: At least 87 million migrants have moved to Europe (COE), which currently hosts the largest number of surveyed migrants.
Asia: Thanks to digital nomadism and other appealing attractions in this region, it now hosts about 86 million migrants, giving Europe a run for its money.
North America: With 23 independent nations in this region, it's easy to see why it would be a good option for the 59 million migrants who have moved here.
Northern Africa and Western Asia: These regions have experienced an influx of migrants, which stood at 50 million in 2020.
Africa: Many African migrants move within the continent, with East and West African countries experiencing the highest immigration rates.

Rising migration numbers have pushed countries to consider the reasons behind this growing interest and how it could affect their economies in the future. Let's consider the motivations, which can be categorized into two:

The push factors are the reasons people leave their native homes and can tie to anything from conflict to economic challenges, natural disasters, or oppressive governments. For example, the refugee crisis has resulted in a significant number of migrants to Europe.
The pull factors. These are factors in the host countries that make them attractive to migrants. Examples include access to better amenities, reuniting with loved ones, and a better quality of life.

People often move to other countries due to a combination of push and pull factors.

The Economic Impact of the Growing Numbers

Immigration statistics have almost doubled in the last two decades. Take Europe as an example. In 1990, it averaged 49 million international immigrants. This number grew to 56 million by 2000, 70 million by 2010, and 87 million by 2020. If this trend continues, Europe could be hosting more than 100 million migrants by 2030. Does this have economic effects? Let's consider how migration flows affect economies.

The Good

The growing number of migrants may have raised questions, but there are many reasons why many countries are open to receiving immigrants. What are they?

An economic boost

For any economy to grow, it must have sufficient resources to back infrastructure development, with labor being a key factor of production. Many migrants provide labor to their host countries (skilled or unskilled) and thus fill gaps that citizens could not have filled. Moreover, since most migrants often move to improve their quality of life, they are usually willing to take up several jobs or challenging tasks that citizens would have avoided.

More innovation

What happens when you allow other people to come to your country? They introduce things from their homes that can improve how you approach things. Host countries get access to new ideas that can foster more innovation and growth as people start thinking outside the box. Sometimes, the ideas are as simple as small-scale businesses that citizens can also adopt. At other times, the ideas are so innovative that they transform entire industries, e.g., a new way of building houses.

Increased fiscal abilities

Countries rely on taxes and social security contributions to develop and maintain infrastructure. However, this is not always possible due to aging or small populations in some regions. In such cases, immigrants can fill the gap and contribute to society, thus balancing demographics and economic stability.

Thanks to these impacts, many host countries witness faster growth than they would have if they were to rely on their citizens alone.

The Bad

While immigrants contribute to the workforce and introduce innovative ideas in host countries, they also present economic challenges, as follows:

Increased job competition

Immigrants can provide skilled and unskilled labor in their host countries, as is the case with citizens. As such, they introduce competition in job markets where the demand for jobs is lower than the availability of such positions. This effect is especially common in the low-skilled job categories, which would typically go to the citizens.

Burdens on public infrastructure

As the number of people grows, so does the need for services. For example, suppose a government had set aside funds to develop infrastructure for 50 million people. In that case, the same resources would not meet the demand if the migrant flow exceeds this number. In many cases, citizens and migrants face pressure when accessing healthcare, affordable housing, good-quality education, and other services that the government is unable to provide optimally due to the unprecedented numbers.

Moreover, increased competition for jobs and resources often pushes authorities to develop policies to ease the tension between citizens and migrants. This integration also comes at a cost, as the government must allocate resources to ensure a balance.

Conclusion

While the negative economic effects of the growing number of migrants may seem daunting, the positive impacts often outweigh the bad. Our data-driven guides delve into migration patterns and consequences to help you explore the financial impact of migration flows across the continent.