Opinion

Don't ignore the economics of immigration

5 min read

21 August 2013

Professor Maurits van Rooijen suggests that attracting the brightest and best candidates will bring economic growth.

In the facade of a building near the Dam square in Amsterdam one can spot a relief stone of a hand catching a cockerel, a relic of Hancock’s grocery store that once stood there. In 1600 Eduard Hancock decided to seek his fortune in the new Republic, which was breaking-away from the Spanish kingdom. 

The Netherlands quickly became known for its tolerance, welcoming people with religions and ideas who elsewhere were being discriminated against or even prosecuted, to join the new nation. This influx of fresh talent, knowledge and capital was a major factor launching The Netherlands into what became known as its famous Golden Age. 

Hancock made his own lasting contribution to that, as did many others to a greater or lesser extent. Similar factors can also be seen to have played a major role in the rise of the United States of America.

From these and many other historic examples one cannot draw the conclusion that immigration will automatically bring about prosperity nor can one argue that immigration is good for economic growth. But the economic historical lessons should be a warning to be careful with anti-immigration rhetoric because it can pose economic dangers. 

A national economy greatly benefits from attracting wealth, talent and knowledge from abroad. In many countries in mainland Europe a foreign student who graduates will have a year to seek a job and if they succeed to find graduate level employment with an appropriate salary they qualify for a work permit. These governments are not trying to be nice or hugely supportive to foreign workers, but simply realise that such a policy is wholly in the national economic interest. Attracting the best and brightest candidates will bring economic growth.

Sticking to a purely social-economic approach to the issue of immigration, the related question is whether multiculturalism is good or bad for performance and productivity. Research has shown that when comparing the performance of mono-cultural with multi-cultural teams, the latter either do much worse or much better. 

That might not sound like a shocking conclusion but the real question is of course why this is the case. From my perspective, it all has to do with leadership. If a multicultural team is led by someone who wants to impose a dominant culture, it will do worse than a mono cultural team. 

However, if the team leader really understands what diversity can achieve and is willing to bring in the strength of different cultural viewpoints whether based on nationalities, gender, subcultures etc, in other words is willing to create a new team culture, this new team will easily outperform the mono cultural team.

That lesson not only applies to team leadership. One can argue that organisations and companies can use multicultural human resources to their advantage with appropriate management. And by extrapolation I even dare to suggest that it can be applied to countries and governments.

Diversity can be a major strength if dealt with in a smart and competent manner. Of course, I very well understand that in such matters rationality and emotion are far from identical. And as any experienced politician can explain, voting is 10 percent based on rationality, 90 per cent on emotion.

My training in social-economic history explains my views and at a more personal level as a contemporary counterpart of Hancock from the Netherlands, making my contribution to British prosperity (I have been associated in the last three years with three Queens Awards for Enterprise in the Export category) I feel I should at least suggest that it is in national economic interest to approach the current immigration debate with some level of sophistication: immigration is not simply good or bad.

Professor Maurits van Rooijen is CEO and rector of the London School of Business and Finance