Are We Limiting the Borders of Progress?

Posted by: on May 20, 2019 | No Comments


Isn’t it ironic that amidst a race towards globalization of business, the major economies of the world are becoming increasingly protectionist in their outlook? The problem is that those propagating closed borders aren’t really concerned about protecting the local economy, they are more concerned about keeping people out. No, I’m no John Lennon, imagining a world without countries, conflict or division. I am an economist, who believes that free flow of goods, human resources and capital will only help boost the global economy.

Is a World Without Borders All Bad?

Borders, by definition, exist to separate one set of people from another. Recent times have seen an increasing push towards this, with growing concerns of terrorism and the influx of refugees from war-torn nations. But, as Michael A Clemens, from the Center of Global Development, states, “The world impoverishes itself much more through blocking international migration than any other single class of international policy.”

Yes, the reality is that people wish to emigrate in search of a better life for themselves and their families and, therefore, work hard to be entrepreneurial and this leads to incredible gains for the host country. Individuals and businesses in the host country interact voluntarily with the immigrants. A research paper by Clemens, published in one of the journals of the American Economic Association, clearly states that barriers to migration leads to huge losses for the global economy.

Without hard or closed borders, not only would people be able to freely move, capital would also flow freely and easily, leading to a larger global pool of funds that could aid businesses worldwide.

The Schengen Area is a living example of this. The 26 European nations that are part of this economic zone are not only seeing growth in trade, they are living without the fear of war looming large over their heads. The free flow of goods, services, capital, technology and human resources is what globalization is all about.

Open Borders Help the Host Country

Of course, open borders need a radical change, not just in the way we think but in infrastructure. We will need to revise our policies on trade, health and welfare, environment and even conflict resolution (a euphemism for war). Welfare benefits for immigrants are attacked and used as a justification for closing borders. The answer is to abolish all welfare for locals and immigrants alike. Period.

It has become much tougher for people to move across borders, but money still travels. If labor is cheaper in another nation, work is outsourced. Factories are shut down in one part of the world and reopened at the other side of the globe. All of that is good. This is what leads to workers being employed at their productive best but an even better way us to let people move freely.

What suffers due to this is the economy. A program on US-based National Public Radio, aired on April 2, 2019, revealed how the closing of the international border with Mexico in November 2018, due to the approaching migrant caravan, affected retailers in San Diego. This shutdown only lasted for a few hours but led to an estimated loss of sales worth $5.3 million.

A key benefit of open borders is the creation of new employment opportunities. Not only would it be easier for businesses to expand to different countries, it would offer employment and economic benefits to more than one nation. People move to another country mainly in search of better employment opportunities. And, productivity of the entire world increases and there is better distribution of labor.

The fear that immigration increases unemployment in the host country is misplaced. Yes, some jobs are lost but a similar number regained through increased economic activity – buying of goods and homes by immigrants.

Other Benefits of Open Borders

Financial Inclusion

There has been so much talk of financial inclusion in recent times. But, one simple way to ensure financial integration and inclusion is to allow the free flow of financial resources across countries. For now, technology that allows electronic cross-border transfer of funds has helped aid globalization and the integration of the global financial markets. A further push to financial integration could drive greater investment, especially FDI.

International Trade

A relaxation of trade restrictions will ensure true globalization. Free movement of goods across borders can be ensured through a reduction in tariff barriers, ad valorem, voluntary export restrictions, subsidies and revenue tariffs. This could lead to an increase in trade between different countries.

Sharing of Technologies

Technology is evolving at a rapid pace, easing all aspects of life and business. From more efficient manufacturing methods to easier access to goods and services and even bringing down costs, there is a lot that developing economies can gain from the sharing of technology.

The problem is that most policies are created out of either fear or short-sightedness. The vision isn’t for inclusive progress all across the world. It is about how can we do better than the others. I feel disappointed when I look at Brexit or President Trump’s attempts to keep certain types of people out of a country built by immigrants. Maybe I have a utopian bent of mind but I do firmly believe that only when we move beyond our restricted borders will we be able to drive sustained growth.

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