CIAO DATE: 08/02

Security and the Political Economy of International Migration

Trading States and Migration

Richard Rosecrance (1986) argues that the world has transformed into a system of trading states, where power is increasingly based on Ricardian notions of comparative advantage, factor mobility, and free trade. As gains from trade and interdependence increase, as they have under the past half-century of American hegemony, the use of a military-territorial strategy is a less appealing means of maximizing state power, especially since war has become increasingly costly, complicated, and destructive (Cf. Morgenthau, 1948; Kennedy, 1988; Mueller, 1989; Kupchan, 1994). Proponents of "Washington consensus" neoliberalism argue that liberal trade policies and laissez-faire treatment of international factor flows moves economies toward a Pareto-optimal frontier, one that will create a "rising tide to lift all boats" in both developed and developing nations, though perhaps not evenly (Krugman, 1995; Krugman and Venables, 1995; Krugman and Obstfeld, 1997). Considerable evidence supports the argument that trading state globalization has emerged as a global norm and as a widely accepted basis of state grand strategy since World War II. Since the 1940s, successive rounds of the GATT (now the WTO) have resulted in consistently lower tariff rates that have helped stimulate world trade. From 1980-1998, world trade has grown anywhere from 4.2% to 10.3%, and between 1990-1999 world trade has grown at over three times the rate of global output (World Bank, 1998; WTO, 2000). Moreover, financial transactions, once an adjunct of trade, now tower of trade flows by a ratio of 50:1 (Ruggie, 1995:48; see also Cohen, 1998).

Given the gains available through open, trading state policies, it would seem logical that states would seek economic maximization through labor mobility as well as trade and capital flows (Ghosh, 2000). Howard Chang (1998:373) argues that, "economic efficiency in the global labor market would call for unrestricted migration, which would allow labor to move freely to the country where it earns the highest return. Market forces would thus direct labor to the market where its marginal product is the highest. Given the large international differences in wages, it should be apparent that the potential gains from international trade in labor . . . are large." Economic transformations resulting from the IT revolution and changes in the global division of labor (Mittelman, 2000) have created a tremendous surge in demand for services and skilled labor (Cornelius, Espenshade, and Salehyan, 2001), and knowledge-based human capital is emerging as an ever more important component of state power. Services already constitute 70% of the GDP in the United States, of which 64% are in the high-value category (Rosecrance, 1999). World exports of commercial services reached a level of $1.35 trillion in 1999, of which Western Europe's commercial services exports account for 47% of the world total (WTO, 2000). Even with the slowdown in the high tech sector, the U.S. Bureau of Labor forecasts that the nation will need 1.7 million computer technicians during the decade ending in 2008, with demand increasing exponentially (Los Angeles Times, 5 August 2000:C1). As the domestic labor force in advanced industrial economies shifts toward higher-skill professions, demand for low-skilled labor in industry, agriculture, and domestic services has concomitantly risen (Cornelius, 1998).

Full text in PDF Format (55 pages)