Imagine Ania, a Ukrainian immigrant who arrived in Berlin, Germany in the spring of 2022 with her teenage son. At the moment, the 2001 Temporary Protection Directive provides them with the reassurance that they can stay for one year. If Ania ends up staying longer term, however, her career and economic success will depend on choices she had to make in that first year – choices that were based on how long she expected to stay.
When the chances of staying in a host country are uncertain, why spend time and money learning the language? Why integrate? Why start to build a new life? Will Ania insist as vigorously on her son completing his homework in a foreign language and school system when she is unsure of how long she will be in the EU?
If Ania and her son do stay, however, the effects of decisions made during the very first months and years following their arrival could reverberate for decades. Ania may have been a certified architect in Ukraine, but to be recognised and work as an architect in her host country will require additional qualifications. She may choose to take a lower-paid job instead of investing in additional training if there is uncertainty about how long she can stay.
Being able to provide certainty about the option to settle is often a significant factor for both refugees and other migrants when it comes to settling and thriving in a new country for the long term. Immigration policy should reflect this need for certainty.
Looking beyond a one-year permit
EU leaders triggered the Temporary Protection Directive for the first time this year, following the Russian invasion of Ukraine on February 24. It provides a non-bureaucratic one-year permit for refugees arriving in EU countries. It is designed as a means for member states to respond rapidly to large-scale crises, preventing a collapse of regular asylum systems.
But many of the refugees that have since arrived in the EU may well have to stay for longer than a year. Although the directive can be extended, the prospect of settling for the longer-term remains uncertain for these refugees. This may have profound consequences for both immigrants and their new countries.
My recent research with Jérôme Adda of Bocconi University and Christian Dustmann of University College London shows that giving migrants certainty about the option to stay at an earlier stage could improve their integration, shape their economic contributions, and ultimately cement their acceptance in host societies. We used data on Turkish immigrants in Germany, where a large-scale survey has collected information for decades on immigrants’ expected length of stay. Many of the migrants interviewed for this survey arrived in Germany under guest worker agreements with southern European countries in the 1960s and 1970s.
The immigrants who expected to stay in Germany permanently integrated faster, acquired new language skills more quickly and saw greater economic progress. In particular, we found that short, temporary permits with an uncertain chance of extension make people behave quite differently than those who expect to stay permanently. The latter spend more of their income locally, and have a higher incentive to integrate, learn the local language and acquire other country-specific skills that increase their chances of employment. This furthers career progression, productivity and earnings in the host country. So individual choices will have macroeconomic implications in terms of immigrants’ tax contributions to their host country’s fiscal budget. An understanding of this kind of behaviour is important for the design of optimal migration and naturalisation policies.
Longer-term migrants are often more demanding about the type of job they are willing to accept. And, while contributing more via income taxes, they are also likely to use public services and health care for longer, particularly as they grow old and their contributions to these services fade. Long-term migrants are also often joined by their families. This raises demand for the host country’s education system, but also fosters further integration.
For many migrants who intend to return to their home country, it is more common to send money home to their families rather than spending it locally. And, knowing that their stay in a host country is limited, they may decide to forgo host country-specific investment in areas such as learning languages and new skills to suit local economic needs, which can be costly.
Governments often delay making a decision on whether to allow a migrant permanent status for several years, basing it on employment, earnings or other targets such as learning the language. Our research shows this not only affects the number and kinds of people that chose to migrate to a certain country, but also their career profiles and long-term contributions to their new home country. The idea that long-term certainty encourages integration and supports economic contributions applies to migrants in many contexts, including that of economic migrants and political refugees, as well as documented and undocumented immigrants.
The new refugees into the EU from Ukraine, who have been granted one year of protection initially, have a limited incentive to invest in local skills. This certainly includes the host country language, but it also extends to acquiring qualifications and certifications that are of limited value back home, but are valuable to the host country.
Clear legal procedures that inform immigrants early on about their prospects of staying in their host countries are crucial for decision making and could greatly affect the lives of these people. It will also impact the costs and benefits to the countries where they work, consume and receive support or pay taxes. If immigration policy takes this into account, it could do much to help immigrants like Ania and her son feel more at home, while also boosting their economic contribution to their host countries.
Charting the Global Economy: Factories Slow Down From US to Asia – BNN
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Manufacturing from the US to Asia is very much in a slowdown as factories continue to struggle with supply snarls, labor shortages and elevated materials costs.
A measure of US manufacturing activity weakened in June to a two-year low, and several regional Federal Reserve surveys indicated business activity shrank. Factory purchasing managers’ gauges across Asia eased, with South Korea, Thailand and India among those showing the biggest declines, according to S&P Global.
Similar indexes in Poland, Spain and Italy also showed weaker activity compared to May.
Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:
Consumer spending fell in May for the first time this year and prior months were revised lower, suggesting an economy on somewhat weaker footing than previously thought amid rapid inflation and Fed interest-rate hikes.
Regional Fed manufacturing surveys have taken on a grimmer tone, with four of five indicating business activity shrank in June. Separately, a measure of overall manufacturing slid to a two-year low as new orders contracted, restrained by lingering supply constraints and some softening in demand.
The pandemic housing boom is careening to a halt as the fastest-rising mortgage rates in at least half a century upend affordability for homebuyers, catching many sellers wrong-footed with prices that are too high.
Confidence in the euro-area economy slipped as households become more pessimistic amid fears a Russian energy cutoff will spark a recession. At the same time, they’re less worried about inflation than they were a month ago, though there’s a split between core and peripheral euro-area countries.
After suffering from unprecedented shocks in recent years, the UK is succumbing to more intractable problems marked by plodding growth, surging inflation and a series of damaging strikes.
China’s economy showed some improvement in June as Covid restrictions were gradually eased, although the recovery remains muted. That’s the outlook based on Bloomberg’s aggregate index of eight early indicators for this month. The overall gauge returned to the neutral level after deteriorating for two straight months.
Japan’s factory output shrank at the fastest pace since the height of the pandemic as the lagged impact of China’s virus lockdowns continued to disrupt supply chains and economic activity in the region. The weakness in manufacturing extended across Asia, particularly in South Korea, Thailand, India and Taiwan.
Colombia’s central bank delivered its biggest interest rate increase in over two decades. Policy makers are bracing for another spike in annual inflation that’s already above 9%.
Two years after Argentina emerged from its latest default, a debt crisis in brewing once again. This time, the immediate trouble is in the local bond market, where creditors have become reluctant to roll over maturing government bonds.
Zambia’s inflation rate dropped below 10% for the first time in almost three years in June, bucking a global trend of record consumer-price growth. Optimism over the nation’s economy since the election of Hakainde Hichilema as president in August, a potential debt restructuring and a $1.4 billion bailout package from the International Monetary Fund has seen a rally in the local currency, which has helped contain prices.
Differences in underlying inflation trends call for different policy outlooks among the world’s top central banks, according to Bloomberg Economics. The Fed will have to go well into restrictive territory, the Bank of England may go a little above neutral and the European Central Bank might not even get that far.
©2022 Bloomberg L.P.
Quarterly Investment Guide 3Q 2022: US economy on shaky ground – CNBC
Minister Of The Economy Franz Fayot On Luxembourg’s Transition Towards A Green Economy – Forbes
Just last week, Luxembourg’s Minister of the Economy, Franz Fayot, came to the cities of Toronto and Montreal as part of an economic mission organized by the Luxembourg Chamber of Commerce in close cooperation with the Ministry of the Economy. I had the opportunity to sit down with Minister Fayot at the InterContinental Toronto Centre, and get some insights into the Grand-Duchy’s economic transition towards sustainability.
A transitioning economy
With up to one-third of its GDP related to the finance sector, Luxembourg’s economy is widely dominated by the financial sector. However, the past 20 years have been characterized by a push for economic diversification, and increased transparency and regulations following the financial crisis, said Minister Fayot.
“What we are trying to do is diversify [the economy] even more into new sectors to make us less dependent on the financial sector and adaptable to new circumstances,” he said. “We are also more and more developing a green finance sustainable finance sector, which is doing very well.”
A green state responsibility
Minister Fayot, whose guiding principles are a strong welfare state and sustainability, firmly believes that the government must assume its pivotal role in shifting the economy towards sustainability — “both in terms of environmental sustainability, but also social sustainability,” he added.
In June 2020, an international consultation was launched to gather strategic spatial planning project ideas considering the climate-related challenges and social issues, and support for the country’s ecological transition towards a zero-carbon territory by 2050.
“We need to understand that we have to help businesses innovate, and invest in the future,” said Minister Fayot.
A rising startup ecosystem
Luxembourg has seen a steady growth in startups over the past decade.
Earlier this year, the Ministry of the Economy launched a strategic initiative aimed at providing a thorough understanding of the startup ecosystem based on data analysis and interviews with key stakeholders.
Luxinnovation, the national innovation agency, identified over 500 active startups offering innovative digital and data-driven solutions in its latest mapping.
These assessments will also provide relevant comparisons with international markets, and aim to identify the necessary next steps for development opportunities in the upcoming years.
“Our innovation agency is there to guide startups, but also other more established businesses, to get access to grants,” explained Minister Fayot. “We have a state aid framework in Europe which we have to comply with, but the main message is that there is an obvious need to co-finance innovation, particularly in times when we are in this transition towards a more green economy.”
Going above the limits of territory
Surrounded by Belgium, France and Germany, Luxembourg is one of the smallest countries in the world — slightly smaller than Rhode Island. Yet, despite its dependence on its neighboring countries’ energy supplies, it is making continuous efforts to increase its share of renewable energy by also investing in projects across its borders, said Minister Fayot.
“We don’t have that much sun in Luxembourg, and we don’t have an unlimited space to build wind power,” he said. “It’s a bit of a limiting factor, but it shouldn’t excuse anything.”
“We are investing a lot into energy efficiency,” he added. “We are trying to get people to e-mobility and pushing for geothermal heating and energy in new constructions.”
A growing space sector
Luxembourg might not be the first to come to mind when we think of space, but, the country owns one of the world-leading satellite operators, and is increasing its investment into space resources.
“The SpaceResources.lu is an initiative that we launched about six years ago, and it is very much focused on the space resources segment of the space industry,” he said. “We are not launching anything in space out of Luxembourg, but focusing on services like space traffic management.”
As part of the economic mission, a group of space companies participated in a distinctive program set up by the Luxembourg Space Agency in collaboration with the Canadian Space Agency. This included on-site company visits, workshops and B2B opportunities that led to the signing of a Memorandum of Understanding between the two national space agencies.
Stephanie Ricci contributed to this story.
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