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Posted on November 13 2019

Immigration has a positive impact on the economy

By Editor
Updated April 03 2023

Migrants to other countries bring with them talent and expertise to their host countries. They also make significant contribution to the economies of the countries that they choose to settle in. Numerous research studies reiterate this fact. There are many countries that value the contribution of migrants and have immigration friendly policies. This has helped their economy and chart a growth trajectory that benefits both the native and immigrant population. This post will discuss the economic benefits migrants bring to their host countries.

Reasons why developed countries encourage migration

Countries like Canada, Germany and Australia encourage migration because it is crucial for the growth of their economy. They realize issues such as an aging population, lower birth rates and the lack of skilled workers will have an impact on their economy and look at migrants from developing countries with a young and skilled population to solve this problem.

There is no doubt migrants make significant contribution to the economic development of their host countries, here are the facts:

According to the IMF, migrants contribute to the increase in GDP and productivity of their host country through increased productivity. This is not confined to just highly skilled workers but even low-skilled migrants.

While highly skilled workers contribute with their specific knowledge and diverse skills, low-skilled workers can do the occupations for which the local population is not available.

Migrants with higher level education, experience or expertise can contribute to high-impact areas like technology, medicine, education, etc.

Those with low and medium level skills can fill the skills gap in specific industries. They can fill positions that locals are not keen about. For instance, immigrants make up about two-thirds of taxi and transport drivers in Australia.

Immigrants can contribute to the economy by starting new businesses in their host country. According to a report by OECD, in France, more migrants are engaged in entrepreneurship than the native people. Their businesses can also be a source of employment.

Migrants also contribute to the economy as consumers and taxpayers. Their tax contribution adds to the funds payable to pensioners and contributes to the public health care in these countries.

Immigration benefits for Canada

Canada is a good example of a country that has reaped the advantages of immigration. And it plans to encourage migrants to contribute to economic development for a long time to come.

Over 320,000 migrants moved to Canada in 2018 the highest since 1913. Around 60% of them were economic migrants. Immigration is based on a points system that has endured over the years. The OECD feels that the points-based system is a role model of efficient migration management.

According to the research group, Conference Board of Canada, the aging population and the declining fertility rate among the local population is forcing the government to sustain the immigration levels or otherwise face the prospect of losing 0.1 million workers per year till 2026.

The country must deal with an imbalanced labor force. In the next 20 years around 13 million people are expected to retire from the workforce but only 11 million of the native population are expected to fill in for them.  Industries will be looking at immigrants to fill the gap.

Immigration, according to research studies, will make a significant contribution to the GDP of the country. Without immigration, the GDP growth is expected to drop to 1.1% by 2040 according to a 2019 report by Conference Board of Canada. But if immigration is continued the GDP growthMer is expected to be somewhere between 1.5 to 2 percent.

There is no doubt that immigration has contributed to the GDP growth of the country.

In spite of the benefits migrants can bring to the economy of the host country, the concept of immigration has always been a subject of debate. Political differences exist on the issue of accepting migrants. Countries have two options when it comes to immigration- one to limit immigration and forgo economic benefits or encourage immigration for better economic growth.


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