Like it or not, migrants both rich and poor will shape our economic futures

Whether due to conflict, global warming or simply rich people trying to improve their lot, migration is almost certainly set to grow
As many communities, particularly in the rich, developed world, begin to age rapidly, migration is likely to be the only way to replenish populations

David Dodwell

Published: 1:00am, 5 Aug 2023

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Whether for the uber rich or desperately poor, migration has surged in importance worldwide in the past few years, triggered in particular by Covid-19 and Russia’s invasion of Ukraine. Whether the issue triggers political controversy or governmental self-congratulation depends on which migrants are knocking on your door.

But political conflict, global warming and the widespread skill shortages driven by demographic change suggest that migrant flows are likely to become more significant in shaping our economic future. Even if migrants are resented or despised, our need for them will grow, and we need intelligent strategies to aid assimilation.

The debate also depends on whether the migrant is part of the bedraggled poor escaping conflict zones or famines, or a high-net-worth individual being wooed for investment.

Here in Hong Kong, the draconian Covid-19 lockdowns and outflow of perhaps a few hundred thousand people – in the wake of the 2019 street violence and national security law – have triggered anxieties over a brain drain and a possible decline in important economic sectors. Links with mainland China have been strengthened, but perhaps at the expense of our historically indispensable role as an international services hub.

In Europe, in particular in Greece and Italy, as well as in Britain, migration has triggered an almost-daily narrative describing desperate and impoverished migrants from Africa and conflict-torn Middle Eastern countries arriving in small and unseaworthy boats in search of refuge and security. Similarly angry narratives accompany the efforts of thousands of South American migrants to cross the Rio Grande into the United States.

Strongly anti-migrant sentiments have made this a thoroughly toxic political issue, and given rise to strange and irrational political responses. Most dramatic of all is the UK government’s plan to fly migrants to Rwanda, at an estimated cost of £170,000 (US$218,500) per migrant. The Refugee Council says the annual bill could exceed £1.4 billion.

Members of Stand up to Racism protest against the UK government’s planned deportation of refugees to Rwanda, at the High Court in London, on December 19, 2022. Photo: EPA-EFE

For impoverished Rwanda, with a population of around 14 million and a per capita gross domestic product among the world’s lowest at US$966, the deal could be a source of badly needed income. But could Britain not put the money to better use at home? What the migrants may think about being bundled off to one of Africa’s poorest countries is another matter altogether.

Over past decades, many governments in the developing world have generated indispensable income streams through both unregulated emigration and migrant labour schemes. The United Nations estimates that there are around 281 million migrants worldwide, two-thirds of them in Europe, the US or Saudi Arabia and the Gulf States, many making regular remittances home.

Remittances amounted to around US$794 billion last year, with over US$100 billion destined for India, US$60.3 billion for Mexico, US$51 billion for China and US$38 billion for the Philippines. In small countries like Nepal, Kyrgyzstan and Tajikistan, remittances can amount to around 30 per cent of GDP. Even in the Philippines, it amounts to about 9 per cent.

04:18

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These are the migrants we usually hear about. But there is another species of migrant who attracts an altogether different response. They are what the Financial Times has called “moneybags on the move”, high-net-worth individuals anxious to whisk their wealth away from conflict or keep it from the tax authorities.

Among them are many of the world’s 2,640 billionaires and the roughly 62 million individuals lucky enough to have accumulated over US$1 million of investible wealth.

A private wealth study by Henley and Partners identifies Australia as the most consistent beneficiary of “moneybags” activity, combining safety, excellent healthcare and education, a high quality of life, use of the English language and no estate duty. It says the government has attracted 82,000 high-net-worth investors over the past 20 years, with 5,200 more expected this year.

Right behind Australia is Dubai, which according to the Henley report has a strong track record of attracting uber-rich investors, in particular from India, and recently also from Russia. It expects 4,500 investment migrants this year, up from an average of 1,000 a year. Singapore, the US and Switzerland follow close behind.

According to the Investment Migration Insider, there are around 38 investment migration programmes vying for the super-rich, with over US$21 billion raised through such schemes in 2019.

As China’s millionaires keep leaving, outflows may be ‘more damaging than usual’

Where do these investors come from? The major source seems to be mainland China, “which continues to lose large numbers of billionaires to migration”, according to Henley. Hong Kong is in the mix too.

The UK, traditionally a magnet for investment migration, has also seen a sharp reversal over the past six years, with an outflow of 12,500 uber-rich investors between 2017 and 2022, and more than 3,000 expected to leave this year, according to Henley.

Despite the bad press normally associated with migration, several realities are clear. Whether it is destabilisation due to conflict, global warming making many parts of the world increasingly inhospitable, or simply people trying to improve their livelihoods, migration is almost certainly set to grow.

As The Migration Agency notes, “migrants contribute disproportionately to new business formation, innovation, and job creation”. And, as many communities, particularly in the rich, developed world, begin to age rapidly, migration is likely to be the only way to replenish populations.

Whatever the political mood, we should encourage migrants and fund them to acquire the skills we need as populations deplete and talent pools shrink.

David Dodwell is CEO of the trade policy and international relations consultancy Strategic Access, focused on developments and challenges facing the Asia-Pacific over the past four decades