Per-Åke Andersson 031-786 1353 per-ake.andersson@economics.gu.se Globalisering och utveckling Karlstad Universitet, HT2010 F5: Migration och FDI Per-Åke Andersson 031-786 1353 per-ake.andersson@economics.gu.se 2017-11-01

INTERNATIONAL MOVEMENTS OF LABOR Table 6.3 Immigrants as a percentage of the Population and the Labor Force, 2005 Country Percentage of Population Percentage of Labor Force Europe Sweden 5.3% 4.8% Austria 9.7% 12.0% Switzerland 20.3 20.9 Belgium 8.6 9.1 United Kingdom 5.2 5.4 Denmark 5.0 4.0 Japan 1.6 0.3 France 5.6 5.3 Traditional Immigrant Countries Germany 8.8 9.3 Italy 4.6 6.0 Australia 23.8 24.9 Luxembourg 39.6 62.6 Canada 19.1 19.9 Netherlands 4.2 3.4 United States 12.9 15.2

Sveriges in och utvandring 1850-2000 Källa: Thomas Lind

INTERNATIONAL MOVEMENTS OF LABOR Figure 6.2 Output and Welfare Effects of International Labor Migration Wages in the U.S. W’US WUS Sl’ Sl e d a F c b E DUS Labor Force in U.S. Panel a Wages in India W’I WI Sl’ Sl e’ d’ a’ F’ c’ b’ E’ DINDIA Labor Force in India Panel b

Immigration to the New World Source: Alan M. Taylor and Jeffrey G. Williamson, 1997, “Convergence in the Age of Mass Migration,” European Review of Economic History, 1, April, 27–63. © 2008 Worth Publishers ▪ International Trade ▪ Feenstra/Taylor

A P P L I C A T I O N 1 IMMIGRATION AFFECTS BOTH THE DEMAND AND THE SUPPLY FOR LABOR APPLYING THE CONCEPTS #1: Although we normally think that increased immigration will reduce wages, what factors could cause it to raise wages? A recent study by Gianmarco Ottaviano of the University of Bologna and Giovanni Peri of the University of California, Davis, estimated that during the 1990s immigration, on average, increased the average wage of U.S.-born workers by 2.7 percent. They took into account that increased immigration led to increases in the supply of labor and additional investment, and as a result, both the demand and the supply for labor shifted, with the shift in demand slightly outpacing the shift in supply. When they looked more closely at wages, they found the wages of high-school dropouts fell, while wages of workers with at least a high-school education increased. The reason for this difference was that high-school dropouts compete most directly with the new immigrants, whereas those workers with more education do not.

Gains from Immigration World Labor Market Foreign Wage Workers move from Foreign to Home until equilibrium is reached at C, full migration, with wages equalized at W’ Wage, W The Home wage, W determined by A, is higher than the Foreign Wage W* at A* The gains to Home and Foreign from migration can be shown. Gains to Home A A* W W* L B W’ C L’ Gains to Foreign Home Wage Figure 5.14 World Labor Market Initially, Home has OL workers and Foreign has O*L workers. The Home wage is W, as determined at point A, which is higher than the Foreign wage W * at A*. Workers will move from Foreign to Home to receive higher wages. The equilibrium with full migration is at point C, where wages are equalized at W ′. The gain to Home from migration is measured by triangle ABC, and triangle A*BC represents the gains to Foreign. 0’ L L* World amount of labor © 2008 Worth Publishers ▪ International Trade ▪ Feenstra/Taylor

Gains from Immigration Table 5.3 Workers’ Remittances and Net Foreign Aid, 2005 Shown here are the remittances received by various countries from their citizens working abroad. In many cases, these remittances are larger than the official aid received by the countries. An exception was Sudan, which was experiencing a humanitarian crisis in 2005 so that aid was high. Source: World Development Indicators, The World Bank. © 2008 Worth Publishers ▪ International Trade ▪ Feenstra/Taylor

Kapitalflöden mellan länder: Utländska direktinvesteringar Utländsk direktinvestering (FDI), när ett företag blir ägare till ett företag i annat land I Sverige (och USA) gäller 10 % regeln. Greenfield FDI—när ett företag bygger en fabrik/företag från grunden. Acquisition FDI (Brownfield FDI)— när ett företag köper ett existerande företag Geley, Spiker,

INTERNATIONAL MOVEMENTS OF CAPITAL Table 6.1 Selected Indicators of FDI and International Production, 1982-2005 Value at Current Prices (Billion dollars) Annual Growth Rate (per cent) Item 1982 1990 2002 2005 FDI Inflows 59 202 651 916 –25.8% –9.7% 27.4% 28.9% FDI Inward Stock 647 1,789 7,123 10,130 9.7 20.6 16.1 6.1

INTERNATIONAL MOVEMENTS OF CAPITAL Table 6.2 Regional Distribution of FDI Flows, 2003-2005 Region/Country FDI Inflows FDI Outflows Developed Countries 59.4 85.8 European Union 40.7 54.6 Japan 0.8 49.9 United States 12.6 15.7 Other Developed Countries 5.3 10.6 Developing Countries 35.9 12.3 Africa 3.0 0.2 Latin America & the Caribbean 11.5 3.5 Asia & Oceania 21.4 8.6 Central & Eastern Europe 4.7 1.8 World 100.0

INTERNATIONAL MOVEMENTS OF CAPITAL Figure 6.1 Output and Welfare Effects of International Capital Mobility Return to Capital, U.S. R’US RUS Sk’ Sk e d a F c b E DUS Capital Stock, U.S. Panel a Return to Capital, India R’I RI Sk’ Sk e’ d’ a’ F’ c’ b’ E’ DINDIA Capital Stock, India Panel b

Gains from Foreign Direct Investment World Capital Market Foreign Rental Rental, R Home rental rate (R) is lower than Foreign (R*). Capital will move from Home to Foreign to receive a higher rental Equilibrium with full capital flow is at B with rents equalized at R’ Gains to Foreign and Home can be shown Gains to Foreign A A* R* R K K’ C R’ B Gains to Home Home Rental Figure 5.15 World Capital Market With 0K units of capital at Home, the Home rental is R, at point A. The remaining capital 0*K is in Foreign, and the Foreign rental is R*, at point A*. Capital will move from Home to Foreign to receive a higher rental. The equilibrium with full capital flows is at point B, where rentals are equalized at R′. Triangle ABC measures the gains to Home from the capital outflow, and triangle A*BC measures the gains to Foreign. 0’ K K* World amount of Labor © 2008 Worth Publishers ▪ International Trade ▪ Feenstra/Taylor

© 2008 Worth Publishers ▪ International Trade ▪ Feenstra/Taylor Det har skett ett stor ökning I Sverige av direktinve. Globalisering 30% anställda, globaliseringskommissionen Skillnader I företag © 2008 Worth Publishers ▪ International Trade ▪ Feenstra/Taylor

Foreign Direct Investment

Foreign Direct Investment