Sebastian Mallaby writes,
In Let Their People Come, a new book published by the Center for Global Development, Lant Pritchett reports that if rich countries permitted extra immigration equivalent to 3 percent of their labor force, the citizens of poor countries would gain about $300 billion a year. That's three times more than the direct gains from abolishing all remaining trade barriers, four times more than the foreign aid given by governments and 100 times more than the value of debt relief.
Traditional economics says that trade in goods and services would be sufficient to lift the standard of living in developing countries (although not necessarily to top levels). It says that capital mobility ought to be sufficient to lift wages in developing countries to top levels.
But books like William Lewis' The Power of Productivity show why trade and capital mobility are not sufficient. Workers can be more productive in the United States because of our institutional base, most notably competitive markets. Our management know-how tends to stay within our borders, because other countries have too many institutional barriers, including regulation and corruption.
