More Workers Nixing Move to Developed Countries

In the Romanian capital of Bucharest, wheat and corn fields 100 kilometers northwest of the city have been cultivated for generations, but their harvests are noticeably diminishing each year.

Many Romanians hoped that their country’s entry into the European Union in January last year would increase wheat and corn exports, but this has not materialized. The traditional international trade theory of comparative advantage, which says trade can benefit all parties as long as each exclusively produces its specialized goods at lower relative cost, apparently has not worked.

The post-communist transition to market economics has produced aberrations outside of traditional economic theories and long-held notions, due to the slower pace of globalization, cultural differences and lingering communist practices. The migration of workers from Eastern Europe and the former Soviet Union cannot be explained solely by wage differences, either.

▽ Comparative advantage without production and sales efficiency

Since the entry of Romania and Bulgaria into the EU, world food organizations have been witnessing an “abnormal phenomenon.” Romanian wheat production has been cut in half to 2.9 million tons, and that of corn has suffered a similar fate.

According to the Romanian National Institute of Statistics, more than 20,000 farmers left their wheat or corn fields to find a job abroad last year. Bucharest is now trying to stop its agricultural industry from collapse.

Romanian agricultural researcher Cornelia Alboiu said, “Corruption among grain brokers and government officials, higher costs for export logistics, and lack of market information among farmers are hampering the country from enjoying comparative advantage.”

“Comparative advantage is of no use without efficient production and sales targeting export markets.”

▽ Migration to countries at similar development stage

Another long-held notion that has failed to materialize is that opening borders will cause people from developing or underdeveloped countries to move to more developed nations.

Figures suggest that worker migration from Eastern Europe and the former Soviet Union to advanced economies after border openings has been gradual.

A Russian analysis said workers from Russia and former Soviet republics such as Ukraine, Belarus and Moldova prefer places with a similar lifestyle and culture to their own.

The United Kingdom’s Office for National Statistics said that in 2005, 230,000 people moved to countries poorer than their own, while the number of those migrating to richer nations fell 52,000.

Russian labor expert Roman Valerievich said, “Workers tend to avoid migrating to a place with high living costs and discrimination.”

viyonz@donga.com