Seven of the world’s ten richest economies by real gross domestic product (RGDP) per capita are in Asia and the Middle East, and all have sizeable populations of foreign migrant workers (FMWs) that have contributed greatly to growth. The proper handling of FMW involvement in an economy is crucial for continued prosperity. Despite the widespread reliance of many economies on FMWs, much of the related research has focused on the narrower issue of the impact of foreign labor on local employment and the resultant downward pressure on local wages (e.g., Borjas et al. 1996. Goto 1998). In comparison, very little evaluation has been done on the extent of their contribution to economic growth across countries.

While there has been strong promotion of free global trade in goods and services as well as in capital inputs, the case has not been made so forcefully for increasing the international mobility of the other factor of production, labor. A recent article in The Economist, Free Exchange—Border Follies, surveys the latest research on the potential benefits of increasing international labor migration (The Economist 17 November 2012). The estimates are staggering, with possible increases in world output and income ranging from 30% to 100% (amounting to an additional $20 trillion to $70 trillion) depending on the level of migration assumed. These calculations swamp the potential benefits of increasing international trade, which is estimated to be less than 3% of global output. The research shows that the gains come from migration-induced productivity increases in the host country and the additional incomes are more than sufficient to compensate for any adverse effects, for example, if wages for some host country workers fall in the short term. Remittances (worth around $300 billion a year) are also sent to the migrant source countries to compensate those who stay behind.