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How Migration Makes the World Brainier

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A few years ago, I visited a library in North Korea. I asked the librarian which authors were popular. He replied that everyone loved the works of the Great Leader Kim Il-Sung and his son, the Dear Leader Kim Jong-Il. Sure, I said, but what other authors did North Koreans like?

The librarian fell silent. He could not name a single one.

Of the 70-odd countries I've reported from, North Korea is perhaps the most illuminating. The world's last Stalinist dictatorship is hermetically sealed from the outside world. Hardly anyone is allowed out, and hardly anyone is allowed in (it wasn't easy getting a visa.)

Because North Korea shuts out people, it shuts out ideas. That's one big reason why it is a starving backwater. Its more open cousin, South Korea, which welcomes foreigners and sends hordes of students and businesspeople abroad each year, is 17 times richer.

South Koreans worry whether their children will make it to the right university; North Koreans worry whether their children will make it to the age of five.

The central message of my book, Borderless Economics, is that when people move around, they spread new ideas, mostly for the better.

For example, the world's cheapest fridge was born of a marriage of minds between Indians in America and Indians in India. Three Indian-American engineers (Uttam Ghoshal, Himanshu Pokharna and Ayan Guha) were working on a cooling device, based on technology used to cool laptops, that they thought might work in a fridge. One of them had trained at IBM, so he knew a thing or two about computers.

While back in India visiting relatives, they decided to show their design to an Indian manufacturer called Godrej and Boyce. It so happened that Godrej was already working on a super-cheap fridge for poor rural Indians. The two teams joined forces and produced a little fridge called the Chotu Kool that will sell for a mere $70 - less than half the price of rival fridges.

This is a common story. Brainy Indians or Chinese emigrate to the West. They imbibe technology at a western university. They work for a while at a western firm. They stay in touch with their brainy compatriots back home. They constantly swap ideas - something that was difficult a generation ago but now, thanks to cheap communications, is laughably easy.

Sometimes migrants go home, bringing the latest western know-how with them. I asked the boss of Tata Consulting Services, a big Indian IT firm, what proportion of his top people had studied or worked abroad. He replied: "All of them."

A study by the Kauffman Foundation found that two-thirds of entrepreneurs who return to India from America maintain at least monthly contact with their old colleagues in America.

For now, the West is far more advanced than the emerging nations, but they are catching up fast. Ideas already flow in both directions, and before long, the trickle of technology out of India and China will turn into a torrent.

A good example is 'frugal innovation'. Chinese and Indian firms are leading the way in making products that are not merely 10% cheaper than the alternatives, but 90% cheaper.

Asian frugal innovators are making not only fridges but also medical devices and pre-fabricated houses that are an order of magnitude cheaper than we are used to. Devi Shetty, a veteran of Guy's Hospital in London, now runs a heart hospital in Mangalore where heart bypasses cost less than $2,000 (compared with $20,000 - $100,000 in America) and survival rates are just as good.

Asians embrace frugal innovation out of necessity. Westerners will embrace it because, other things being equal, we'd rather not pay more. And we will be far better plugged in to the coming boom in Asian technology if we allow more Asians to work and study here.

Migration boosts business, too.

Consider the story of Cheung Yan, a Chinese woman who moved to America two decades ago. She noticed two things. First, Americans throw out mountains of waste paper. Second, cargo ships sail fully-laden from China to America but go back half-empty. (American exports to China, such as films and IOUs from the government, don't take up much space.)

So she loaded that waste paper onto ships and sent it to China for recycling. Using her connections there, she set up factories to turn it into cardboard (much of which was turned into boxes for televisions that were then shipped back to America).

She is now one of the richest women in the world. Her business is part-Chinese, part-American; part of what Niall Ferguson, a historian, calls 'Chimerica'. As an outsider who understood both countries, Mrs Cheung spotted an opportunity that was invisible to her monocultural neighbours. And both countries benefited from what she saw.

The world is full of budding Cheung Yans. Some 70 million Chinese live outside mainland China. They form 70 million bridges between their motherland and the rest of the world. They speak the language, they understand the business culture and they have connections. That matters immensely in a country where the rule of law is unreliable. It's why nearly 70% of foreign direct investment in China is handled by the overseas Chinese, and why western firms find it easier to do business there if they hire Chinese immigrants.

Migrants bring youth, energy and better food. In Britain and the US, they pay far more in taxes than they consume in public services, and are twice as likely as the native-born to start their own companies.

But the most important reason for welcoming newcomers is that they bring bright new ideas.

No rich country is going to allow unlimited immigration from poor ones any time soon. But if we shut all the doors and windows, it's going to be awfully dark in here.

Robert Guest is the Business Editor of The Economist and the author of Borderless Economics: Chinese Sea Turtles, Indian Fridges and the New Fruits of Global Capitalism, which will be published by Palgrave Macmillan on 1 December