Human Capital
International flows in human capital (the attributes of a person that are productive in an economic context) refer to the movement of people and skills across borders. This occurs at two levels, the physical migration and the virtual - where labour and skills are traded digitally.
Migration
Migration relates to the physical movement of people across borders. In the 21st century we are witnessing migration at unprecedented levels. Migration can improve cultural and trade integration and act as a catalyst for innovation. It is not without its difficulties, however, and can cause social, economic and political tensions for both the migrant's host and home countries. The most recent development to affect the levels of migration in the UK is the expansion of the EU.
Skills
Skills are highly tradable and can move to locations for higher premiums. The flexibility of the labour market can result in more efficient allocation of resources through specialisation and growth in productivity, however, the home country may view this as a loss of investment and value added.
- Globalisation - international communication skills (Adobe Acrobat Reader Document - 35.87kb)
Labour Market
The labour market is where the demand and supply of labour are reconciled. Globalisation has led to a difficult short term transition for developed economies as structural shift away from traditional industries to knowledge based industries has led to some large scale redundancies whilst the demand for high end skills has increased.
Last Updated: 6th June 2008
