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August 05, 2015

What if there were no national borders?

We should all know our limitations. But what we could easily do without is the concept of national borders -- at least as far as they limit the mobility of people. This idea may seem like a naïve utopia. But mobility without borders is already a reality, the European Union being a prime example.

Just imagine what a huge economic potential this could unleash on a global scale. Economists estimate that world GDP could be increased substantially -- possibly even doubled -- this way. The effect would be much greater than any gains from the free movement of goods and capital. Poverty could be combated on a truly global level for the first time. That would be a bold program for social equity.

What we are currently seeing is too little -- not too much -- international mobility. The common fear that the "rich" countries are threatened by massive inflows of migrants is completely unfounded. The actual migration potential under free movement is grossly overestimated.

Just recall the doomsday scenarios that were painted before EU enlargement, as scores of welfare migrants from East and Central Europe were expected to flood the West. None of this has come true.

Moreover, even today, about 97 percent of the world's people live in the country where they were born. This clearly stands in the way of an optimal allocation of resources. Never mind that this 97 percent ratio is the same as it was back in the year 1900 -- well over a century ago! That's hardly an indication of globalization sweeping the world.

Of course, unlimited mobility would boost the number of immigrants to "rich" countries. But it is a common myth that this would have negative effects on the local population. On the contrary, numerous studies have shown the positive effects of immigration on natives' wages and employment.

In addition, our social security systems already rely heavily on financial contributions made by immigrants -- not the other way around!

There also is no denying that in most developed countries, demographic change will continue to increase the need for immigrant labor.

But what about the countries from which people emigrate? They would be hurt by "brain drain", a common argument goes. This overlooks the great potential arising from remittances and innovative impulses from the diaspora communities abroad.

Open borders will encourage more temporary and circular migration. Many prospective migrants are not planning to stay in their destination country forever. In the absence of borders, it becomes much easier to move back and forth. The option to return any time will counter the potential "brain drain".

So are we moving to a world where we can generate boundless prosperity through mobility without restrictions? If we think the unthinkable, more prosperity for all is absolutely possible.

This opinion piece was first published on the Huffington Post's The World Post. Click here to read it online.

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We recognize that IZA World of Labor articles may prompt discussion and possibly controversy. Opinion pieces, such as the one above, capture ideas and debates concisely, and anchor them with real-world examples. Opinions stated here do not necessarily reflect those of the IZA.