T here are two chapters in the ERP that deal with globalization, one on immigration and another on international trade. Both are topics that have given the Bush Administration heartburn. Before 9/11, the administration upset Republican lawmakers by suggesting it might endorse an amnesty to illegal immigrants. After 9/11, and the discovery that several of the hijackers were in the country illegally, discussion of an amnesty was quietly shelved. On trade, the first Bush term witnessed conflict with Europe over U.S. tariffs on imported steel and tax subsidies to U.S. exporters, outcry over former CEA chairman Gregory Mankiw's approving remarks on global outsourcing by U.S. companies, and battles in Congress over the Central American Free Trade Agreement and other proposed trade treaties. This legacy may account for the somewhat defensive tone the

Over the last three decades, Mexico has aggressively reformed its economy, opening to foreign trade and investment, achieving fiscal discipline, and privatizing state owned enterprises. Despite these efforts, the country's economic growth has been lackluster, trailing that of many other developing nations. In this paper, I review arguments for why Mexico hasn't sustained higher rates of economic growth. The most prominent suggest that some combination of poorly functioning credit markets, distortions in the supply of nontraded inputs, and perverse incentives for informality creates a drag on productivity growth. These are factors internal to Mexico. One possible external factor is that the country has the bad luck of exporting goods that China sells, rather than goods that China buys. I assess evidence from recent literature on these arguments and suggest directions for future research. (JEL E23, E65, F14, O10, O20, O47)

In this paper, I selectively review recent literature on illegal migration from Mexico to the United States. I begin by discussing methods for estimating stocks and flows of illegal migrants. While there is uncertainty about the size of the unauthorized population, new data sources make it possible to examine the composition of legal and illegal populations and the time-series covariates of illegal labor flows. I then consider the supply of and demand for illegal migrants. Wage differentials between the United States and Mexico are hardly a new phenomenon, yet illegal migration from Mexico did not reach high levels until recently. An increase in the relative size of Mexico's working-age population, greater volatility in U.S.–Mexico relative wages, and changes in U.S. immigration policies are all candidate explanations for increasing labor flows from Mexico. Finally, I consider policies that regulate the cross-border flow of illegal migrants. While U.S. laws mandate that authorities prevent illegal entry and punish firms that hire unauthorized immigrants, these laws are imperfectly enforced. Lax enforcement may reflect political pressure by employers and other interests that favor open borders.

We analyze location choices of foreign-born science and engineering students receiving PhDs from US universities. Foreign students who stay in the United States are positively selected on observables. They tend to stay in the United States during periods of strong US economic growth and during periods of weak home country economic growth. Foreign students from higher-income countries and from recently democratized countries tend not to remain in the United States. Education and innovation may therefore be part of a virtuous cycle by which education enhances a country’s prospects for innovation and innovation makes the country more attractive for scientists and engineers.

We study the scale and selectivity of foreign-born PhD students in science and engineering. We focus on students from China, India, Korea, and Taiwan, which together account for most roughly one-third of science and engineering PhD students in the United States. The selectivity of these students is high, as measured by their fathers' relative education levels. In China and India, fathers of students who receive US PhDs in these fields are roughly 15 times more likely to have a BA degree than their contemporaries are to have tertiary education. Over time, selectivity falls for China but the trend for other countries is ambiguous.

We test for home-market effects using a difference-in-difference gravity specification. The home-market effect is the tendency for large countries to be net exporters of goods with high transport costs and strong scale economies. It is predicted by models of trade based on increasing returns to scale but not by models of trade based on comparative advantage. In our estimation approach, we select pairs of exporting countries that belong to a common preferential trade area and examine their exports of goods with high transport costs and strong scale economies relative to their exports of goods with low transport costs and weak scale economies. We find that home-market effects exist and that the nature of these effects depends on industry transport costs. For industries with very high transport costs, it is national market size that determines national exports. For industries with moderately high transport costs, it is neighborhood market size that matters. In this case, national market size plus market size in nearby countries determine national exports.

We use the 1990 and 2000 Mexican and U.S. population censuses to test Borjas's negative‐selection hypothesis that the less skilled are those most likely to migrate from countries with high skill premia/earnings inequality to countries with low skill premia/earnings inequality. We find that Mexican immigrants in the United States are more educated than nonmigrants in Mexico; and were Mexican immigrants to be paid according to current skill prices in Mexico, they would be concentrated in the middle of Mexico's wage distribution. These results are inconsistent with the negative‐selection hypothesis and instead suggest that there is intermediate selection of immigrants from Mexico.