The Contribution of Immigrants to Economies


One of the factors that have reduced the world into a global village is the constant movement of people from one location to another. This has happened for various reasons and has necessitated an interaction of people from different walks of life. The invariable end result of all these interactions is cultural confluence, economic development, and hegemony in political idealism.

People have kept immigrating even from the times of yore. However, one of the most prominent causes of migration, in the olden days and even today, has been insecurity. People move in masses, fleeing from the turmoil in their lands, in search of safer grounds. A case in point is the historic migration of Jews from their ancestral land to avoid persecution by Christians over two thousand years ago. In our modern world, the people migrating for such like reasons are referred to as refugees.

The other factor that has driven people to shift their location of residence is the search for greener pastures. Today this is the principal reason why people immigrate, the greener pastures, in this case being better professional remunerations and rewarding business opportunities: the former has come to be referred to as brain drain whilst the latter, foreign investment.

These modern forms of migrations are both internal and external: the movement of people within the boundaries of a country, from remote, isolated areas to more developed parts, is the internal migration, whereas external is characterized by the movement of people across the border. All are common in that the immigrants move to more developed areas where there are economic opportunities, particularly urban areas and developed countries, respectively. This is one of the reasons the national populations have become increasingly concentrated on the more urbanized locations. (General Migration Patterns, Robyn Iredale, Stephen Castles, Charles Hawkley, Migration in Asia: Population, Settlement and Citizenship Issues.

Positive Economic Implications

Once immigrants move into new vicinity, especially with the objective of bettering their own lives, they bring with them changes that soon inevitably manifest themselves in the lands that they choose to live in. these changes are either social, cultural, political, and even economic.

In their book, Demography for Decision Making, Louis G. Pol and Richard K. Thomas Louis and Richard lay out a clear-cut criterion of analyzing the economic gains that immigration can bring about. These factors include the participation of immigrants in the labor force in the new locations they settle, their level of participation, and the patterns of participation they choose to follow over time.

Second is the effect of immigrant participation in the labor force on the availability of jobs to the natives and on the wage rates in the market. Thirdly, the extent of their contribution to the economies in terms of tax contribution and the purchase of goods and services, and lastly, the level of consumption of public services, the cost involved, and the extent to which immigrant’s contributions offset their use of services.

Before we delve into the direct influence that immigration has on economies, it’s advisable to consider how that effect stems and particularly from the cultural aspect. The intermarriages of cultures, otherwise known as cultural confluence, have a direct impact on the ways of life of both the immigrants and the natives.

This goes a long way to determine the thinking of the two diverse people that have now integrated. From that mindset come the determinants of the decisions to be made in matters not only political and social but also economics. This, in turn, determines the quality growth of the economies. Louis and Richard allude to this fact in their effort to elaborate on the economic impact of immigration. Using the United States as an example, they claim that the ever-growing waves of immigrants into the American society has two ends to it: besides adding numbers to the population, it has melded the characteristics of both the immigrants and the natives into a unique culture.

As stipulated above, the inflow of immigrants and their subsequent settling never ends with the intermarriages of cultures; it does results in a population explosion. These arrivals of immigrants into developed economies herald the boost in human resources and even business investment.

This is evident in the deliberations of both A.G. Kenwood and A.L. Lougheed, in their book, The Growth of the International Economy 1820-1960, International Long-Term Capital Movements, 1820-1913), where they consider the economic consequences of migration in Europe in the nineteenth century.

They underscore how each inflow of population provided a strong impetus for economic growth in investments, income, and employment. They argue that the chief contribution of immigration to industrial development in the new destinations that immigrants settled was and still is the numerical addition to a country’s population. These large numbers provided both the labor force that was in acute need in the new location and also the large and expanding markets that were essential to industrialization and large scale-production.

The two go further to say that immigrants have thus provided the manpower for the expansion of industries. On top of that, the industriousness and creativity of immigrants, which they have carried their home countries, have provided a considerable contribution in the overall shaping of the world’s dominant economies, as is the case in the United States.

The question of diversity which is a direct product of the integration between the immigrants and natives, is also lauded by George J. Borjas, who discusses the relation between immigration and economic growth. In his book, Heavens Doors: Immigration Policy and the American Economy, Borgjas argues that diversity pays even economic-wise. This is true in the sense that the economic gains from immigration are optimized in cases where the immigrant population differs the most from the native population.

Using the United States as an example, Borgjas mentions that the US wouldn’t be better off if the integration between the immigrants and the natives occurred fast to the extent that the immigrants end up being native clones. Thus, he adds, the productivity gained from immigration would be enormous if the US enacted policies that slowed down the integration between the two populations, and if such measures are not taken, then the only way to replenish the productivity gains from immigration would be to absorb more and more immigrants.

Immigration may also increase the productivity of some native workers: Borgjas explains this by claiming that less-skilled immigrants can take up the many tasks in a modern industrialized economy and thereby giving ample time to the natives to tackle other more economically productive tasks. He also argues that immigration can lower many prices of many goods and services. This directly benefits the natives.

While discussing the economic benefits from immigration, Borgjas goes on to state that in the case of the United States, immigrants bring in skills that are at times scarce amongst the natives. Subsequently, the natives benefit in that there exist production complementarities between immigrant workers and the natives. Following that, the economic benefits from immigration are larger when the productive abilities are different from those of the natives.

In addition, immigrants bring knowledge and expertise obtained from their home countries. As an example, the United States benefits from the education of such immigrants without paying for the cost of their education since their home country is the one that obviously footed the cost of their professional development. (Building a Workforce for the Information Economy, a research conducted by the National Research Council (U.S) Committee on Workforce Needs in Information Technology, p. 151)

Apart from that, the immigrants can facilitate trade with their home countries and link between domestic technology businesses and those in their home countries. In the same line, immigrants do increase the level of potential in the US working force: foreign workers who seek employment in the US market tend to be highly skilled compared to the average foreign or US worker. Besides, the US firms can be able to considerably reduce their labor cost to the extent that foreign workers are willing to work for less than comparable US workers when these foreign workers are located abroad in relatively low-wage countries. And finally, the research pointed out that immigrants contribute to the national output in that foreign workers at times specialize in works that wouldn’t otherwise exist domestically. The native population, therefore, benefits because it consumes the output of that production. (Building a Workforce for the Information Economy, a research conducted by the National Research Council (U.S) Committee on Workforce Needs in Information Technology, p. 151)

Another positive gain that immigration may bring into economies comes about when immigrants are made to pay more in taxes than they receive in government benefits. Consequently, the immigrants generate a net fiscal transfer to the native taxpayer. (C. Fred Berger, The United States, and the World Economy: Foreign Economic Policy for the Next Decade, pg361). This, however, can create a long-term negative attitude amongst foreign investors in that it gives no incentive to them.

Negative Impact of Immigration on Economies

The positive contribution that immigration wrought on economies, both nascent and developed, which is characterized by diversification in growth, cannot be gainsaid. Nonetheless, immigration has also led to the deterioration of some economies or hampered their full-scale development.

For one, the explosion of the population through immigration has not necessarily translated into economic prosperity. In countries where the economy is effete, the infrastructure is dilapidated, the industry sector isn’t adequately developed to cater for the ever-increasing demand for employment; ins such countries, another influx of immigrants who are not economically motivated but rather are seeking favorable conditions like security, immigration causes a strain on such economies.

Another backside of immigration is that it offers a leeway to the admission of large numbers of low-skilled individuals into an economy. This only helps to heighten the existing inefficiencies in a country’s welfare system: at the end of the day, the distortions that are associated with property rights over things like air, common areas, and highways get even worse. Besides, in cases where immigrants pay less in their taxes than they receive in government benefits, they then invariably generate a net fiscal burden on native taxpayers. (C. Fred Berger, The United States, and the World Economy: Foreign Economic Policy for the Next Decade, p. 361).

When immigrants settle down in a new land and prosper, they increase the likelihood of being hated by the natives. For instance, the reason the Jews were hated in Germany during and before the rule of Hitler was their vibrant contribution to the German economy, in that they had almost entirely taken over the economy from the Germans. In case such immigrants instantly pull out of that particular country, they will definitely leave a vacuum that will impact negatively on the country’s economy.

George J. Borjas concurs with this fact in his book, Heavens Doors: Immigration Policy and the American Economy, when he claims that when immigrants reach a new location, they acquire skills and learn more about alternative jobs, the wage gap between immigrants and natives narrows. And if only the ablest and driven persons have the ambition and wherewithal to leave for a new life in a foreign land, it’s likely that immigrants overtake natives in terms of their earnings.

Another negative impact of immigration on economies is that immigration tends to concentrate so much potential in the developed areas leaving the less developed ones with less or no human resources to jumpstart their economy. In pursuit of a satisfactory standard of living, desirable jobs, and a convenient mix of accessible services and amenities, for instance, throughout the Pacific, has led to the declining participation of young men in the agricultural economy Robyn Iredale, Stephen Castles, Charles Hawksley, Migration in the Asia Pacific: Population, Settlement and Citizenship Issues, p. 56).

Immigration also proves to be futile if at all it’s not economically motivated. This occurs when people cross borders in search of safety. They end up being refugees in the foreign land, putting so much pressure on a budget of the governments they have settled in.

Far from that, as brought out in the Building a workforce for the Information Economy research conducted by the National Research Council (U.S) Committee on Workforce Needs in Information Technology, the benefits of immigration enumerated directly translate into disadvantages in some other quarters.

For instance, knowledgeable immigrants take their know-how to more developed economies, which hardly paid the cost of their education. This dents the home economies that really developed their professional potential.

Finally, it should be noted that though migration can bring adverse ramifications into an economy, it’s however obvious that such instances are few, and by far, they cannot outweigh the positive contribution that immigrants do add to economies. In any case, some of the vibrant economies have been erected by the contribution of immigrants.

Annotated bibliography

Berger, The United States and the World Economy: Foreign Economic Policy for the Next Decade, The Institute for International Economics 361. 2005

The work by Suzanne Berger relates the matters of the American economy as a country of one of the highest rates of immigrants. The American immigrant experience should help other countries deal with the problems of immigration

Alan Booth, Ann C. Crouter, and Nancy Landale. Immigration and the Family: Research and Policy on U.S. Immigrants. Mahwah, NJ: Lawrence Erlbaum Associates, 1997.

The chapters of this book address the questions and related issues of immigrants: Who migrates, and how does it affect family outcomes? How does the migration experience affect child and adolescent development? How do family structure and process change across succeeding generations? What policies enhance or impede immigrant family links to U.S. institutions?

Borgjas, Heaven’s Door: Immigration Policy and The American Economy, Princeton University Press 88.

Borjas is the leading American economist conducting research and writing about immigration policy today. He provides a comprehensive account of the economic impact of immigration on this country, considering the skills of the immigrants and their national origin

Dentler, Robert A., and Anne L. Hafner. Hosting Newcomers: Structuring Educational Opportunities for Immigrant Children. New York: Teachers College Press, 1997.

The may be regarded as one of high importance for the governments of the countries, who strive to deal the problems of the immigrants successfully. Summing up the experiences of the other countries, the authors of the book offer economical solutions of the problem.

Kenwood and Lougheed, International Long-Term Capital 1820-1913,

The book concerns the issues of world capital growth, and in some measure it touches the factor of immigrants, and their contribution level to the economies, foreign investments – implications, migration and labor force – effects.

Kenwood, A.G. The Growth of International Economy 1820-1960, International, 66, 84.

Like the previous source, this book relates the matters of the movement of the world finances, regarding the factor of immigrants, foreign investment and the incoming labor forces.

Kloosterman, Robert, and Jan Rath. “Immigrant Entrepreneurs in Advanced Economies: Mixed Embeddedness Further Explored.” Journal of Ethnic and Migration Studies 27.2 (2001): 189.

Article relates the special issue on immigrant entrepreneurship and mixed embeddedness. The special issue has grown out of an EC-funded programme of networking research entitled Working on the Fringes: Immigrant Businesses, Economic Integration and Informal Practices’.

Li, Peter S. “Earning Disparities between Immigrants and Native-Born Canadians [*].” The Canadian Review of Sociology and Anthropology 37.3 (2000): 289.

The article describes the main economic problems of the immigrants, and offer the way of solving these matters.

Louis and Thomas, Demography for Decision Making, Quorum Books 84.

The article includes mainly theoretical approaches to the matters of demography, and provide the considerations on some key demographic matters

Marjory S. Blumenthal Building a Workforce for the Information Economy, a research conducted by the National Research Council (U.S)

This timely, in-depth look at IT workers – where they work, what they do, and the policy issues they inspire – illustrates numerous areas that have been raised in political debates

Robyn, Castles and Hawkley, General Migration Patterns, Migration in Asia: Population, Settlement and Citizenship Discourse of Immigrant Integration 1998

The book argues on the matters of immigrants in Asia, why they choose some particular countries, and what policies do the governments of the countries hold towards the immigrants.

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