The Global Economy and Business

There are three sets of players in the immigration market: the people contemplating whether to leave their home countries, the governments of immigrants’ home countries, and the governments of the potential host countries. All these players enter the immigration market with different objectives, and it is the interaction among them that leads to a particular sorting among the various countries.

Individuals make the immigration decision by comparing the values of the various alternatives. By considering the financial and legal constraints regulating international migration, they choose the country likely to make them best off. These constraints include individual financial resources. After all, international migration is costly. The costs include direct expenditures, such as out-of-pocket expenses associated with transportation of immigrants and their families to their new homes, and they include indirect costs, such as the income losses associated with spells of unemployment that occur as immigrants look for work in the new country. Because only persons, who have accumulated sufficient wealth and savings, can afford to migrate. the potential migrants’ financial resources obviously influence the immigration decision.

Potential host countries also are important players in the immigration market, for they can encourage, discourage, or prevent the entry of certain groups of persons. In particular, potential host countries are characterized by specific sets of economic opportunities (and sometimes ever greater than it’s necessary - just look at the fashion designer companies and their customers) described by existing income distribution, whereby certain types of skills are highly rewarded and others are not; whereby jobs are easily available in some industries but scarce in others; whereby some occupations are in high demand, but high levels of unemployment persist others; whereby persons who experience relatively poor labor market outcomes are subsidized by the welfare state, while persons who experience favorable outcomes are heavily taxed. These differences in income and employment opportunities by skill, industry, and occupation imply that the attractiveness of the economic “offer” made by a host country will vary among migrants.

Host countries also regulate the size and composition of the immigration flow by imposing restrictions on entry according to the potential migrant’s skills, wealth, occupation, political background, moral rectitude, national origin or family relationships with current residents. For example, current U.S. immigration policy makes immigration costs almost prohibitive for persons who do not already have relatives residing here. Other countries, such as Canada and Australia, have a point system in which potential immigrants are screened and graded on the basis of their educational attainment, age, occupation, and other characteristics. Thus, through their immigration policies and their offers of economic opportunities, host countries compete for the human and physical capital of the potential migrants.

The home countries of potential immigrants are the last major players in the immigration market. Their economies also provide a certain set of income and employment opportunities to their residents, and their immigration policies regulate the size and skill composition of the out-going flow. In some countries, like the United States, citizens are free to leave the country whenever they wish, for any duration, and for whatever reason. In other countries, immigration statutes impose large costs and penalties on potential immigrants and make it very difficult for residents to migrate elsewhere. Moreover, such restrictions often control not only the size but also the composition of the immigration flow. For example, the Soviet Union long prevented the exit of any person who worked in sensitive government jobs, and Cuba prohibited the exit of persons in the age group subject to military service.

According to the article «Immigration and the economy» by By George J. Borjas (the journal «THE SENIOR ECONOMIST»)
J. BORJAS is Professor of Economics at the University of California at San Diego. He is author of «Friends or Strangers» published by Basic Books

Usually people finance their franchise business from different sources. Applying to the SBA (Small Business Administration – one of the main government agencies supporting small business) you can avoid that rule. They finance or guaranty only if the prospective owner also invests his personal money.
 So this rule limits the opportunity to get a credit financing on the one hand. But on the other hand it helps the prospective franchisee to choose what expenses to cover himself and what to finance on a credit basis. Let’s distinguish the eligible and non-eligible purposes according to the SBA.
 

“Good” purposes
1. Capital investment
Capital investment is rather broad concept and can include (but not only) the following:
-to purchase land or buildings,
-to cover new construction as well as expansion or conversion of existing facilities;
-to acquire equipment, machinery, furniture, fixtures, supplies, or materials for construction;
2. Operational financing
Operational financing is used for current business purposes like buying raw materials and inventory, paying of accounts payable, seasonal financing, contract performance, construction financing, export production, and for financing against existing inventory and receivable under special conditions and so on.
3. Buying somebody’s business (no comments)
  “Bad” purposes
1. Financial transactions
Like in the situation with capital investment this purpose is very broad one and may include:
- refinancing existing debt (especially in the situation when company had no sources to pay it back and these sources don’t appear after refinancing);
- financing change in ownership or part of the ownership;
- repaying delinquent state or federal withholding taxes or other funds that should be held in trust or escrow.
2. Non sound business purpose (for the SBA)
 The last thing to say: even if your business meets all of these criteria it doesn’t guaranty that you will get the money. Unfortunately…

Markets are institutions that regulate transactions among individuals. In some markets, goods such as bicycles or cars are exchanged between buyer and seller. A free-enterprise economy uses prices to allocate the scarce goods among the many persons wishing to own them. Only those persons, willing and able to pay the going price, get the goods. Other markets, such as the labor market, guide the allocation of labor among different firms. In these markets transactions involve the exchange of monetary compensation from buyer to seller of the good being purchased.
All markets share two features. They provide the rules of the game in which exchanges are made, and they determine, through the interaction of players in the marketplace, a certain allocation of the scarce resources among competing users. In other words, only a subset of persons will own the limited number of bicycles: and firms and employees will be “married” in a particular sorting of workers to jobs.
There also exists an immigration market, one that allocates persons wishing to leave their current countries of residence among the few countries willing to admit them. Potential migrants, like workers looking for a job, are looking for the best country they can live in. Host countries, like firms looking for specific types of workers, set immigration policies so that they can attract specific types of migrants. Just as the labor market guides the allocation of workers to firms, the immigration market guides the allocation of persons to countries.
The existence of an immigration market implies that countries compete for the physical and human capital of immigrants, that the particular sorting of persons and countries depends on how the offers to potential immigrants differ among the competing countries, and that there will be winners and losers in this competition. Changes in immigration policies alter the flow of immigrants to particular countries.
 according to the article « Immigration and the economy » by By George J. Borjas (the journal «THE SENIOR ECONOMIST» ) 

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