March 28, 2006


Immigration: Global Economies' Crack Cocaine (David A. Andelman, 03.27.06, Forbes)

There was rioting and strikes by construction workers in Dubai last week, which ordinarily wouldn't raise much of a blip on the global radar screen, except for what some of the workers were saying: It's getting to the point where we can earn more money back home in India than we can in the Middle East.

That is a little-recognized, but potentially hugely dangerous, prospect that has gone all but unremarked. Across the region, but especially in the heart of the Arabian Gulf--Saudi Arabia and Dubai in particular--the engine of explosive growth and rapid development has brought millions of grotesquely underpaid workers from the subcontinent and Southeast Asia. How else could one tiny city-state, Dubai, have 80 apartment buildings, each 30 to 60 stories in height, rising at the same time, not to mention the world's tallest office building, expected to exceed 100 stories when it's completed. This structure, the Burj Dubai, happened to have been the scene of last week's violent labor actions, which spread to the construction site of the emirate's new airport facility.

And the construction in Dubai is only the tip of the iceberg, especially for the Gulf region. Saudi Arabia is already in advanced stages of development of an entire new city on the shores of the Red Sea north of Jeddah--the King Abdullah Economic City--which has been budgeted initially at $30 billion. Those prices, however, are built on the assumption of a virtually unending supply of cheap foreign labor of the type that's built Dubai. The kingdom even went so far as to eschew its own developers, including the powerful Bin Laden Group, in favor of Dubai-based Emaar.

The fact is that immigrants, also known as cheap foreign labor, have long been and continue to be the engine of growth for much of the developed world, and even more so in the Second World of regions like the Arabian Gulf. It's not surprising that President George W. Bush on Monday, in proposing his new immigration plan, pointed out that Google was "built by immigrants." For that matter, going back a bit further, New York City was built by cheap foreign labor from Ireland in the 19th century at the same time America's railroads were being stretched from coast to coast on the backs of cheap Chinese laborers.

The problem is that the world is now running out of cheap places to go for labor.

The bidding wars have already begun.

Posted by Orrin Judd at March 28, 2006 3:48 PM
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