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Migration makes for a brainier world

22 January 20200 comments

Migration is making the world smarter, spreading ideas and seeing the economic benefits shared by both the host and origin countries of migrants, according to a swathe of new research.

Almost everywhere, and certainly in Australia, migrants are likelier than the native-born people to start their own business. People who pack up and fly thousands of miles to start a new life obviously have drive and what it takes to succeed in business.

A recent survey found that the most common surnames for founders of new firms in Italy were Hu, Chen and Singh, with Rossi a distant fourth.

In Australia, around 30 per cent of the population was born overseas. That is twice the proportion in the United States, the world’s best-known nation of immigrants.

Until 1973, under what was known as the “white Australia” policy, immigration was largely restricted to people of European origin. Since then, the policy has been colour-blind and unusually welcoming, but also very selective.

Applicants for skilled visas are given points for such things as education, work experience, English proficiency and age.

The ideal age is 25-32, when would-be migrants have finished university and have their whole working life ahead of them.

Australia’s annual intake of permanent migrants has risen since the 1980s, from 69,000 in 1984-85 (including 14,000 refugees) to around 200,000 from 2011 to 2018 (including 10,000-20,000 refugees).

In addition, the number of foreign students at Australian universities doubled, to 400,000, between 2008 and 2018, making higher education the country’s third-largest export.

Oz has been transformed. Big cities are now conspicuously multi-ethnic. In Bankstown, a suburb of Sydney, Lebanese restaurants vie for space with Vietnamese money-transfer shops; 32,000 residents speak more than 60 languages at home. The inflow of brains from all around the world has made Australia richer and more dynamic.

A large migration program has seen Australia’s population double since; the nation’s economy has grown 21-fold and we have enjoyed 28 years of unbroken economic growth.

Across the world, nearly two-thirds of skilled migrants move to America, Britain, Canada and Australia.

But Australia exemplifies several trends. It’s a very destination and can recruit top class, talented migrants.

Globally, the most skilled migrants are the most mobile. They face fewer barriers, because more places want them but they also travel farther.

Around 80 per cent of refugees and 50 per cent of low-skilled migrants move to a neighbouring country, but only 20 per cent of highly skilled migrants do. Half of them travel more than 4,000km.

Within the popular destination countries there are a few super-popular cities. There are more foreign-born residents in Melbourne or Los Angeles than in the whole of mainland China.

The proportions of foreign-born in Toronto, Sydney, New York and London are 46 per cent, 45 per cent, 38 per cent and 38 per cent respectively.

In these cities, smart people from all around the world come together and exchange ideas with each other. Silicon Valley was partly founded by migrants and the City of London could not function without foreign accountants and brokers.

There is strong evidence skilled migrants make locals more productive and create jobs.

Immigrants bring new perspectives and knowledge of overseas markets. Multinational firms that hire lots of skilled immigrants find it easier to do business with their home countries, according to several studies.

The most obvious benefits from migration are what economists call “static” gains—migrants from poorer to richer countries earn more the moment they arrive.

But the real gains are the dynamic ones the complex interplay of newcomers with natives and the outside world.

 One theory doing the rounds is that if all rich countries copied Australia and poached the best foreign talent, poor countries would end up even poorer.

This amounts to a “brain drain”, the argument goes. But the truth is that migrants send money home—a lot of it. An engineer who makes $7,000 a year in Zimbabwe might make $70,000 in Australia and send back more than the entire amount he used to earn at home.

Migrants also stay in touch with their home countries. Some spend a decade or two abroad, and then go back to start a business with the knowhow they have acquired in a more advanced country.

A study by the Kauffman Foundation, a think-tank, found that two-thirds of Indian entrepreneurs who return home after working in America maintain at least monthly contact with former colleagues, swapping industry gossip and sharing ideas.

Also, the lure of earning more money overseas provides incentives for people in poor countries to get educated and acquire marketable skills.