International Business | Diversity and Migration | Asia-Pacific

How Migration Affects International Business

Fast Facts:

  • International migration has increased dramatically over recent decades, and impacted international business activities in various ways.
  • Migrants’ social networks and knowledge of their home countries facilitate international trade and inform MNCs’ outsourcing and FDI decisions.
  • Migrant remittances and “reverse migration” provide financial resources, knowledge, and skills to migrants’ home countries.

International migration has grown dramatically over the past half-century. According to the World Bank, there were 76 million international migrants in 1960, 82 million in 1970, and around 190 million in 2005. By 2015, according to the 2018 World Migration Report, the number of international migrants had risen to an estimated 244 million, accounting for 3.3% of the world’s population. A large part of the increase has been skilled migrants moving from developing to industrialized countries.

The geographic, demographic, social, and political dimensions of migration have been the focus of much attention and debate. But in a research paper titled “Immigrant effects and international business activity: an overview,” SFU’s Rosalie Tung, the Ming and Stella Wong Professor of International Business at the Beedie School of Business, along with New Zealand colleagues Peter Enderwick (Auckland University of Technology) and Henry F.L. Chung (Massey University Albany Campus, Auckland), look at immigration from a different angle: its connections with international business. 

Migrants facilitate international trade between their old and new countries through their social and business networks in both countries and by serving as information channels. They possess valuable knowledge, insights, and connections that can help their employers, or businesspeople they know, shorten the learning process and better adapt their products and pricing strategies to market conditions in migrants’ home countries. They also play a role in “nostalgic trade”: trade in goods and services that satisfy the demand of an immigrant population. Corona beer, for example, was once a niche market segment serving Mexican migrants, but has since become a mainstream brand. 

As with trade, the home country knowledge of immigrants can also facilitate outsourcing and foreign direct investment (FDI). Immigrants are able to provide information about the productivity, reliability, and quality of labor and suppliers in their home countries which can result in better-informed outsourcing and foreign investment decisions by MNCs. 

Another area where migrants have an impact is in financial and knowledge flows. Migrant remittances – money that migrants working overseas send back to their home countries – support families and stimulate spending back home; for some developing countries, international remittances account for more than 10% of GDP. And reverse migration – when migrants return home after working and/or studying overseas – reverses “brain drain” and brings knowledge, skills, and investment dollars to migrants’ home countries. The economic success of countries such as Ireland, Korea, and Taiwan owes much to attracting emigrants to move back home. 

While the migrant effect on international business can negatively affect some worker  populations, especially in the area of outsourcing, the authors argue that the positives outweigh the negatives: “When we consider the impact of international migration on international business activity, it is evident that migration can create incentives for the international exchange of products and services, knowledge, entrepreneurship, tasks, and employment opportunities.”