Global Trade and Migration: Are Trade and Migration Substitutes or Complements? The Case of Nigeria

Abstract

IntroductionMigration of people across national borders and continents is crucial for peace, stability and development at the national, sub-regional and regional levels. The potential for migrants to help transform their native countries has captured the imagination of national and local authorities; international institutions and the private sector. There is an emerging consensus that countries can cooperate to create triple wins --for migrants, for their countries of origin and for the societies that receive them (Economic Commission for Africa (ECA), 2006). The Asian experience is well documented, and a number of recent studies point to the role of exports in growth accelerations. Jones and Olken (2008) identify growth accelerations, and show that these are associated with an average 13 percentage point increase in the share of trade in income (over a five-year period) as well as an acceleration of the rate of transfer of labour into manufacturing. Pattillo et al (2005) pointed to the association between growth accelerations and trade in Sub-Saharan Africa (see also Hausmann et al., 2005).Economists have long argued that exposure to trade leads to increased competition and efficiency, resulting in greater specialization in production, and a wider and cheaper range of goods available to consumers (Dani, 1999 andSalimono, 1999). Likewise, mobility of productive factors (labour and capital) and the reduction of transaction costs are seen as essential to the smooth functioning of markets. In the case of trade, the General Agreements for Tariff and Trade (GATT)/World Trade Organisation (WTO) regime was constructed through a multilateral process with most favoured nation status (MFN), non-discrimination, and reciprocity as the organizing principles. In the case of international finance, exchange rate stability has been pursued unilaterally (by the U.S. during the early Bretton Woods period) and multilaterally through the IMF and World Bank. Both institutions have worked to solve problems of liquidity and adjustment as they arise. In each case, the international community seems to have accepted these goals/goods as indivisible, and herculean political efforts have been made to maintain openness and to solve free rider problems (Hollifield, 2006).Several factors have played an important role in the recent expansion of trade, the growing integration of economies, and the increasing contribution of trade to development. These include the liberalization of tariffs and other barriers to trade; foreign direct investment through trade and investment negotiations and agreements; autonomous unilateral structural reforms; technological innovations in transport and communications; international solidarity through supportive measures (like trade preferences); and the strategic use of policies, experimentation and innovation.The links between trade and factor movements are of increasing importance in a globalizing environment. The two classic papers in this literature are Mundell (1957) andMarkusen (1983). While Mundell used th...