Home Hedge Funds The Coming Migration Crisis – Latin America Vulnerable As Food Prices Rise

The Coming Migration Crisis – Latin America Vulnerable As Food Prices Rise

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Tomorrow evening I fly to Dublin, which I am looking forward to (Cork would be better though). It’s the return journey that terrifies me. Dublin airport, owing to poor management, has subjected passengers to six hour long queues to board planes in the latest example of logistics chains gone awry because of labour shortages and general lack of foresight. In other parts of Europe, the UK and the US, travel is also proving problematic, such that many may think even more carefully about how and when they move around.

It is likely more daunting for people relocating to new countries. In general, the past four years have seen the climate for those wishing to migrate become harsh, the latest example being the Johnson government’s extension of its ‘asylum’ border to Rwanda.

Where will migrants go?

Migration is one of the yet unanswered puzzles in the debate on globalization – other indicators point towards an end of globalization as we know it and a trend towards a more bordered world. Cross-border investment is becoming more regional and trade is too, the flow of ideas around the world is curtailed and within many countries it is polarised. At an institutional level, coordination between countries has become more problematic.

Yet, owing to the strictures of COVID (over 120,000 movement restrictions have been imposed around the world from the beginning of COVID to this February) we do not have a clear picture of what patterns in migration data look like – most data come with a significant lag. However, some estimates put the decrease in familial migration across borders at close to 35% and in general cross border migration in 2020/21 was at its lowest since 2003. Student migration (to the US and UK) has fallen by around 50%. More troubling was the fact that migrants in countries like Saudi Arabia were amongst the most exposed to COVID and to unemployment.

To that end, the role of migration as a factor that will confirm or reject the end of globalization is still hypothetical – but there are factors to watch for.

To start with most ‘visited’ countries for migrants, are the US, Germany and the UK in the developed world, and Saudi Arabia and Russia in emerging markets. Cities tend to be the locus for most immigrants – 25% of workers in German cities are ‘foreign born’. To that extent a reinvigoration of migrant flows should see more workers from Spain, Portugal, Algeria and Morocco come to Paris and Bordeaux, and more South Americans to Dallas and Miami for instance.

In particular, cities are poles of attraction for elites. A German scholar Max Schich has tracked centuries of data to show how Europe’s cultural elite have gravitated to and from key cities – Rome to Paris to Amsterdam and London. Today, perhaps the most interesting trends in this regard are the movement of entrepreneurs from California to Texas, and the role of Dubai as a locus for Russian and Indian business people.

There are some important faultlines, Brexit being a case in point where there has been a sharp drop in EU nationals working in the UK (147,000 left in 2020), with these replaced with migrants from non-EU countries like India, though net migration into the UK is at the lowest in over a decade. Hostility to migrants and refugees from policymakers is one of the uglier faces of the post Brexit political landscape in the UK, though it is not exclusively a British phenomenon. Eric Zemmour’s catcalls are an example.

End of globalization

In the context of globalization, a rough rule of thumb I have is that when the migrant (foreign born) population of a country reaches say 15% of the population, integration becomes a decisive factor. There are not many countries that manage to smoothly integrate more ‘foreign born’ than this (Switzerland is one) and it also seems to be a threshold that sparks a negative political reaction. The test for globalization then is whether developed countries have reached the political and economic limits of migration, to the extent that the flow of people into them becomes more controversial, or whether cities in particular can continue to welcome people from overseas.

Refugee flows from Ukraine will play a big role in this debate, and could to an extent crowd out flows from other countries (Iran, Syria for instance). As is now apparent, Russia’s invasion of Ukraine is producing economic side-effects that are making life in emerging countries more difficult (inflation in Turkey is 73%).

To that end, the issue is to what extent climate damage and food shortages lead to population displacement (from East Africa for instance) and coupled with political instability (Venezuela is the prime example where millions have been displaced). The wild card here is Latin America, where surveys (UN) show a huge amount of people across Latin America who express a willingness to migrate (focusing on the USA) because of corruption, high food prices and shortages and political instability.

The beginning of globalization unleashed flows of people (with remittances following in their wake) around the world, mostly to developed countries and their large cities. COVID, and a political-economic backlash have halted these flows, and the invasion of Ukraine has introduced an entirely new variable into the equation. Where people move to, where they are permitted to move to will shape the next phase of globalization.

My sense so far is that migration is becoming more bounded (notably from Africa to Europe), more regional and with a greater emphasis on cultural assimilation. We will likely enter a period where migration is more within countries and regions, less across borders – in that sense it is less ‘free’. At the same time, migration is becoming both more politicised (by Belarus and Russia) and more forced (by climate change and inflation).

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