IGCSE Economics 0455 – Globalisation and Trade Restrictions: Effects on Migration
International Trade and Globalisation – Globalisation and Trade Restrictions
Learning Objective
Understand how changes in the level of globalisation influence migration patterns, and evaluate the economic consequences for both sending and receiving countries.
1. What is Globalisation?
Globalisation is the increasing integration of world economies through the growth of international trade, investment, technology transfer and the movement of people. It is driven by:
Lower transport and communication costs
Trade liberalisation (removal of tariffs and quotas)
Multinational corporations (MNCs) expanding production networks
International financial markets
2. Trade Restrictions – Types and Rationale
Governments may impose trade restrictions to protect domestic industries, safeguard employment, or achieve political goals. The main instruments are:
Tariffs – taxes on imported goods.
Quotas – limits on the quantity of a good that can be imported.
Import licences – permission required before importing certain goods.
Subsidies – financial assistance to domestic producers, making their goods cheaper relative to imports.
Non‑tariff barriers – standards, regulations or bureaucratic procedures that make imports more difficult.
3. How Changes in Globalisation Affect Migration
Migration is the movement of people across borders for work, education, or a better quality of life. The level of globalisation influences migration through several channels:
3.1 Push and Pull Factors
Push Factors (Sending Country)
Pull Factors (Receiving Country)
Low wages, high unemployment, limited career prospects
Higher wages, demand for labour, better working conditions
Political instability, conflict, poor public services
Political stability, safety, better education and health services
Trade restrictions that shrink domestic industries
Open economies with fewer trade barriers attracting foreign investment
3.2 Direct Economic Links
When globalisation intensifies:
Foreign direct investment (FDI) creates new factories and service centres abroad, generating employment opportunities that attract migrants.
Multinational firms often relocate production to countries with lower labour costs, prompting workers from higher‑cost countries to move in search of comparable wages.
Trade liberalisation reduces the cost of moving goods, which can also reduce the relative cost of moving people (e.g., cheaper air travel).
3.3 Indirect Economic Links
Changes in trade policy can alter the macro‑economic environment, influencing migration indirectly:
Exchange rate effects: A depreciation of a country’s currency makes its exports cheaper, potentially boosting employment in export sectors and reducing out‑migration.
Fiscal impacts: Reduced tariff revenue may force governments to cut public spending, lowering living standards and increasing push factors.
Skill demand: Globalisation often raises demand for skilled labour. Countries that invest in education may retain talent, while those that do not may see brain‑drain.
4. Economic Consequences of Migration Linked to Globalisation
Both sending and receiving countries experience gains and costs.
4.1 Sending Countries
Remittances: Migrants send money home, increasing household income and foreign exchange earnings. \$\text{Remittance inflow} = \sum{i=1}^{N} Ri\$ where \$R_i\$ is the amount sent by migrant \$i\$.
Brain‑drain: Loss of skilled workers can reduce productivity and slow economic growth.
Labour market relief: Out‑migration can ease unemployment pressures, especially in sectors where jobs are scarce.
4.2 Receiving Countries
Labour supply: Migrants fill shortages, especially in low‑skill or highly specialised occupations.
Wage effects: In the short run, an increase in labour supply may exert downward pressure on wages for low‑skill workers, but can also increase overall productivity.
Fiscal impact: Migrants contribute taxes and may use public services; the net effect depends on the balance between contributions and costs.
5. Evaluating the Impact of Trade Restrictions on Migration
When a country tightens trade restrictions, the following outcomes are likely:
Domestic industry contraction: Reduced export opportunities can lead to layoffs, increasing push factors.
Higher consumer prices: Tariffs raise the cost of imported goods, reducing real wages and potentially prompting out‑migration.
Reduced foreign investment: Protectionist policies may deter MNCs, limiting job creation for both locals and migrants.
Policy response: Governments may introduce migration controls to manage inflows, further shaping migration patterns.
6. Suggested Diagram
Suggested diagram: Flow chart showing how changes in globalisation (e.g., trade liberalisation or restriction) affect push/pull factors, leading to changes in migration flows and the resulting economic impacts on sending and receiving countries.
7. Key Points to Remember
Globalisation and trade policies are major determinants of migration patterns.
Both push and pull factors are influenced by economic, political and social changes linked to global trade.
Migration has both positive (remittances, labour supply) and negative (brain‑drain, wage pressure) effects.
Evaluating the impact requires weighing short‑term labour market effects against long‑term development outcomes.