Immigration restrictions are holding back LatAm’s economy

Ricardo Hausmann, Chief Economist of the Inter-American Development Bank argues that more welcoming immigration policies can make the difference for better in LatAm.

In countries traditionally associated with immigration, like the United States, immigrants become a vital part of the economy. The sole threat of barriers to immigration posed by Donald Trump jeopardizes the hugely positive impact immigration can have on a country’s economy.

In the United States, immigrant population represents around 13% of the total, however, among entrepreneurs, immigrants represent about 26%, and in one of every three new businesses you can see an immigrant on the payroll. These are the statistics compiled by former IDB Chief Economist and current Harvard Professor Ricardo Hausmann in order to prove the point that immigration is key to generating new business, and that the same results could be seen in LatAm, if only the region relaxed on its immigration policies.

As Hausmann points out in his report “Trump’s foreign admirers”, the case of the United States is not an isolated incident. In Chile and immigrant from a non-neighboring country is four times more likely to be an entrepreneur. In Venezuela, Italian, Spanish and Portuguese immigrants arriving through the 1950s and 60s are now 10 times more likely to commit to entrepreneurship.

The trend is clear then, immigrants have the power to reinvigorate economies and inject them with new business capital, so it is a real shame that LatAm countries impose unwelcoming barriers to movement.

In his article, Hausmann makes special emphasis on Colombia and Chile. He argues that Chile, despite being one of the regions better standing economies has found that its development has stalled in recent years. One of the reasons for this is its notable lack of immigrants, only 2% of their population. Countries such as Australia, Canada and New Zealand, those which Chile wishes to emulate, have immigrant proportions ranging from 20 to 28%.

Colombia’s situation is even more dire, as immigrants represent only 0.3% of the population, meaning that for every foreigner living in Colombia there are 15 Colombians living abroad.

Hausmann assures that these reduced immigrant populations are at least partially responsible for LatAm’s recent economic slowdown. He argues that as all signs point towards immigrants boosting entrepreneurship, Colombia and Chile make no effort towards attracting immigrants, and in fact are just making it harder.

As crisis broke out in Venezuela a wave of immigrants left their country in search of somewhere else to work, but Colombia wasn’t eager to help. A longstanding disagreement with Venezuela, where Venezuela limited immigration from Colombia and Colombia responded with bitter reciprocity, meant Venezuelans weren’t particularly welcome. At the end of the day, proportionately, the United States and Costa Rica received more immigrants than the neighboring Colombia.

Hausmann, then, argues that this showed a tremendous lack of foresight by Colombia, who unaware of the benefits of immigration, missed the opportunity to receive the region’s next generation of market defining entrepreneurs.


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