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Business Globalization: Immigration and Global Talent

In advanced economies such as Italy and Japan, the economic burden of supporting the elderly falls heavily on an ever-shrinking pool of workers. Those who expected to retire at 60 or 65 can now expect to work well into their 70s, while receiving limited pension and healthcare funds. Women may be encouraged through government-sponsored incentive programs to have more children to maintain stable population sizes.

In addition, governments of advanced economies may open national borders to more immigrants to offset their shrinking workforces. The United States, Canada, and Australia continue to be among the most popular destinations, since they are countries with a long history of immigration and offer more accommodating cultures. Immigration programs focus on attracting individuals with important skills and advanced education, permitting only a small number of immigrants with unique technical expertise to relocate to advanced economies. Other jobs will be outsourced to skilled workers abroad.

Corporations in advanced countries engage in a war for global talent as they fight for the limited pool of high-skilled, high-wage workers. At the same time, higher wages in advanced economies draw unskilled, low-wage workers from developing countries. The inflow of immigrants helps moderate wage pressures at the lower end of the income scale. Large numbers of poor, young, unskilled populations throughout Africa, Latin America, and developing Asia seek menial labor in North America, Europe, Australasia, and Northeast Asia.

The global talent flow: The population growth slows globally. As economic conditions improve and family planning programs become more widespread, fertility rates decline rapidly in developing countries. Among the advanced economies and China, dropping fertility rates and rising life expectancies have swelled the ranks of senior citizens. Some countries experience declines in their total workforce, which add to the fiscal burdens associated with supporting their aging societies. As seniors gain political clout through lobbying groups and pensioners' parties, most governments are compelled to expand their already generous medical coverage for retirees. Pension funds dominate equity markets, and up the pressure on traded companies to emphasize immediate dividends over long-term investment, which in turn impedes innovation and growth. As the ratio of workers to retirees continues to shrink, countries increasingly utilize previously untapped demographic groups - such as women and younger people - to enter the workforce. Moreover, to make up for the labor shortage, industrialized countries have no choice but to open their doors to substantial levels of immigration from all regions of the world. Immigration programs expand for all categories of labor, placing special emphasis on recruiting workers with advanced degrees and rare skills. With open labor markets, skilled professionals migrate to major emerging markets such as China, Korea, and Malaysia, where new metropolitan areas expand to accommodate economic growth and absorb the new skilled migrants.

At the same time, higher wages in advanced economies draw unskilled, low-wage workers from developing countries, since industrialized countries view immigration as a force for moderating wage pressures at the lower end of the income scale. The billions of dollars of wages that migrants send back to their families at home provides a crucial lifeline for developing countries that have not yet found their place in the global economy.

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