Reason for a New Age

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    What you will expect to see here are discussions of politics and tangentially economics. This blog will do its best to present a rational look at the world of today, how the modern world came into place, and the issues that are currently being discussed in the public realm.
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Globalization and Emmigration

Posted by publius2point0 on 2010/05/30

I was recently reading a study of the economic history of Puerto Rico (PDF), a territory of the US which isn’t quite as developed as the mainland nation. The question which prompted this reading was that of the effects of globalization — e.g. businesses moving into regions with lower wages and employing the people there. Theoretically, this should gradually increase the local wage until they become non-competitive with other nations at that pay-scale, but then can use the education and greater wealth to become competitive in the next wage bracket, etc. and so on until they catch up with the rest of the world.

Now, while Puerto Rico isn’t its own nation, they did have low wages and the local government did do things back in the 70s and 80s to encourage businesses to move in. And for something like a decade, the growth of the local economy was impressive, but then it stalled and has failed to raise above that point instead of moving on to higher levels. As with all economic predictions which fail, the issue seems to be one of predicting human behavior. When a person becomes a bit wealthy compared to his surroundings, if he has an easy way to move to someplace better, he takes advantage of that. The wealthier, better educated Puerto Ricans didn’t stay to start the next level of advancement in Puerto Rico. Instead they used their American passports to move to the mainland where they could use their new-gained talents and wealth in a land with more than dilapidated huts and dirt roads.

Similarly, you’ll note the general failure of NAFTA to have improved the state of Mexico. According to the agreement, much of American factory and agricultural work was to be moved to Mexico, thereby helping their country to advance upwards and sparing ours the costs of American production. Instead, it’s plausible that the factories which did open South of the border simply provided the seed money for much of the illegal immigration of the couple decades.

On the other hand, countries like Japan, Southern Korea, and Taiwan have done impressively under the introduction of foreign businesses to their local employment opportunities, to such an extent that they are or are all-but modern nations.

It seems likely that globalization does generally benefit the people of a nation, over a period of a few generations. But that’s only if the people are more or less contained within their own borders. Otherwise, it could just as well harm the nation by robbing it of the best and brightest of its human capital.


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