The US is the new emerging market, says Saker Nusseibeh, chief executive officer and head of investment at Hermes Fund Managers, arguing that granting citizenship to illegal immigrants could increase GDP by$1.5 trillion (€1.2 trillion) over a decade.
This could be as significant for global growth as the emergence of the Chinese middle class.
Nusseibeh says if the US secures a political settlement to bring its significant illegal immigrant workforce into the main economy, it would achieve “significant economic growth”.
An estimated 11 million illegal immigrants account for approximately 7% of the workforce in the US. “They do not appear in official statistics and their output is often difficult to measure,” a note issued by Hermes says.
“However, bringing them out of the shadow economy and into the mainstream would have a significant economic impact.”
The US could collect an additional $4.5 billion in tax revenues within the first three years and add $1.5 trillion added to its GDP over ten years.
On average, it is estimated that an illegal immigrant earns $13,000 a year. This compares to $28,000 for the average American.
Nusseibeh says: “Although the sheer number of illegal immigrants in the US does not amount to the number of those joining the middle classes in China, the multiplier effect of their rising wages is actually larger.”
He adds: “This is because the threshold to middle class in emerging nations is much lower as is their per capita incomes, while in the US, the spending power of even the poor is higher.”
©2013 funds europe