Economists seem to spend a lot of time talking about free trade and, in particular, how good free trade is, or how good it would be. They spend much less time talking about free migration—that is, open borders—and about how good that would be. So it’s a nice exercise to compare the effects of making all international trade free with the effects of making all international migration free.
Michael Clemens, an economist who works at the Center for Global Development, wrote an article in 2011 in which he reviewed estimates of the effect of making trade free and estimates of the effect of making migration free. The article is quite famous, and is called Economics and Emigration: Trillion-Dollar Bills on the Sidewalk?
Let’s look first at the effects of removing barriers to trade. Here we could imagine every country signing a free trade agreement with every other country. What would happen to the world economy? The effects would probably be quite complex, but we can summarize them using world GDP. World GDP is what we get if we add up the GDPs of all the countries of the world. (For a reference point, world GDP was around $88 trillion in 2019, according to the World Bank.)
In his article, Clemens reviewed seven studies that estimated the percentage increase in world GDP that would result if we were to remove all barriers to trade. The estimates are shown in Table 1.
| Study | Estimate of percentage increase in world GDP |
|---|---|
| 1 | 1.8% |
| 2 | 4.1% |
| 3 | 0.9% |
| 4 | 1.2% |
| 5 | 2.8% |
| 6 | 0.7% |
| 7 | 0.3% |
The estimates are all positive, so it seems likely that removing barriers to trade would increase world GDP. But the numbers are quite small, ranging from only 0.3% to 4.1%, with an average of 1.7%. So even though economists spend a lot of time talking about free trade, removing barriers to free trade wouldn’t change the world dramatically.
Now let’s look at the estimates for the change in world GDP that would result from the removal of barriers to international migration. Clemens reviewed four studies that estimated the effect of open borders on world GDP. The estimates are shown in Table 2.
| Study | Estimate of percentage increase in world GDP |
|---|---|
| 1 | 147.3% |
| 2 | 96.5% |
| 3 | 67% |
| 4 | 122% |
Wow. Not only are these numbers all positive, they’re huge. According to these estimates, open borders would increase world GDP by somewhere between 67% and roughly 150%. The average of the four estimates is a little over 100%. Of course saying that open borders would increase world GDP by roughly 100% is the same as saying that open borders would roughly double world GDP. That would certainly mean significant changes to the world.
Open borders would roughly double world GDP. Another way of looking at things is to say that current immigration restrictions make the world only half as rich as it could (and should) be.
This result—that open borders would roughly double world GDP—is a powerful economic argument in favor of open borders.
Question
- Can you imagine a world that is twice as rich as the current world? (Perhaps it will be easier to imagine if you consider doubling the income of every single person on the planet.)