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Latin America Has a Different Migration Problem

Mac Margolis writes about Latin America for Bloomberg View. He was a reporter for Newsweek and is the author of “The Last New World: The Conquest of the Amazon Frontier.”
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A recent survey by Datincorp, a Caracas-based pollster, found that some 57 percent of Venezuelans wanted to leave the country. That number, up from 49 percent just four months ago, is just one facet of the rolling collapse in South America's most benighted nation, which has gone from oil powerhouse to global exporter of people in a little over a decade.

But Venezuela's tragedy could also be its neighbors' gain. The race for advantage in the world economy requires many virtues: A competitive market to attract opportunity-seekers, first-rate universities, the rule of law to protect intellectual property. But the knowledge and experience that outsiders bring to a new land can also be vital to long-term development and productivity. That's why many economists agree that global migration is a highway for talent and can even be a shortcut to entrepreneurship.

Look at Venezuela. Half a century ago, this stable, prospering Latin democracy was a magnet for migrants from Germany, Italy, Portugal and Spain, who helped modernize the country. But ever since Hugo Chavez turned the Andean economy inside out in the name of Bolivarian socialism, the flows have reversed. From 1990 to 2015, the number of Venezuelans living abroad tripled, according to the United Nations. Now the Bolivarian brain drain is doing for the world what the world did for Venezuela last century: Its skilled migrants are ramping up the heavy oil industry in Colombia, starting businesses in Panama, and opening health clinics in Miami and Toronto.

The question is whether the rest of Latin America is ready to take advantage of this demographic windfall -- from Venezuela or anywhere else. Although 244 million people live in countries other than their own, Latin America remains one of the least friendly regions to outsiders. In 2015, migrants accounted for just 1.5 percent of total population in Latin America and the Caribbean.

Compare that with Europe, where foreigners are 10.3 percent of the population, or North America, where migrants make up 15.2 percent of the total.

"Latin America is united in its rejection of Donald Trump's immigrant-bashing rhetoric but has been quietly practicing his policies at home," Harvard economist Ricardo Hausmann told me. And since many studies have shown that foreigners often bring innovation, hawkish immigration policies are not just uncaring but ultimately self-defeating.

Venezuela's 20th-century immigrants represented nearly 7 percent of the population in 1960 but proved much more likely to become entrepreneurs than Venezuelans with similar education. And while today's immigrants may not always come honed with business skills, they often keep in contact with their kin and leverage experiences and technology from their homeland. One recent success is that of Koreans migrants who helped to revitalize the textile industries in Argentina and Chile.

"Migrants are risk-takers," Oliver Stuenkel, a specialist in international relations at the Getulio Vargas Foundation in Sao Paulo, told me. "They rarely count on institutional channels or jobs in the public sector, where risk is not rewarded, and so are forced to innovate."

Of course, importing ringers is no fast-pass to the First World, especially for deadbeat economies. "More than half of worldwide migrant population ended up in the United States, drawn by world-class universities and laws that stimulate enterprise," Carsten Fink, chief economist for the World Intellectual Property Organization, told me.

Asia, for instance, has only slightly more migrants (1.7 percent of its total population) than Latin America, but also cutting edge industries that encourage enterprise and demand innovation. The result: Asia kicked in 60 percent of world patents and over half of new trademarks registered in 2014. By contrast, Latin America accounted for 2.4 percent of world patents and 8.4 percent of trademarks.  

A century ago, Latin America took in the Old World's human jetsam and flourished. Civita, Kuczynski, Slim, and Temer: Imported surnames are ubiquitous in the palaces and corporate towers of the Americas.  

Times have changed. Brazil, the continent's signature economy, has been in prolonged recession, jobs are scarce and the cascade of resumes from would-be immigrants chasing last decade's boom has dried up. But with the economy bottoming out, it's time for Brazil and its neighbors to think ahead. "If national leaders want to take advantage of the next economic boom, the time to put good policies in place is now," Stuenkel said.

That's a challenge that border walls can't meet.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Mac Margolis at mmargolis14@bloomberg.net

To contact the editor responsible for this story:
James Gibney at jgibney5@bloomberg.net