Before speaking about global labour market I’d like to make an assumption.
Nowadays the exchanges from south to north represent only less than 20% of the global exchanges. The economic size of a country and the proximity with others countries affect bilateral trade, that is called the “gravity model”. The importance of trade decreases with distance and increases with the size of the countries involved.
The bilateral trade (Tij) is proportional to GDP (Yi, Yj) and inversely proportional to the distance(Dij) between countries i and j.
Tij = A (Yi)a (Yj)b / (Dij) c
Illustration: During the past ten years, the impact of south-east economies on the Global GDP increased. By the same time, international trades between the countries of this region increased in percentage of the Global GDP and these ccountries trade more among themselves.
With the gravity model, we can explain this situation. As the GDP of these countries is becoming ever higher, it’s normal that international trade is also increasing. An other explanation is the fact there are a lot of small ccountries in the south-east of Asia and they are also very close from each others.
Can we use also the gravity model to speak about migration ? (answer in the next post)