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A blog about migration, remittances, and development

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This blog is hosted by Dilip Ratha, lead economist at the World Bank. Its goal is to leverage migration and remittances for development.  
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January 2009

Helping people escape from poor geography or poor governance - from World Development Report 2009

Submitted by Dilip Ratha on Thu, 01/29/2009 - 17:49

World Development Report 2009, the World Bank's annual flagship, has devoted a significant chapter to the migration of people. “Throughout history, mobility has helped people escape the tyranny of poor geography or poor governance,” argues Indermit Gill, the lead author, “...mobile people and products form the cornerstone of inclusive, sustainable globalization.”

The chapter presents an excellent summary of the literature on migration. A new insight it offers is that "while the returns to scale in agriculture are constant, the returns to scale in manufacturing and services are increasing...A policy maker persuaded by the classical view would restrict the movement of labor...In contrast, a policy maker who recognizes the external benefits of human capital would do exactly the opposite, facilitating migration and clustering, particularly of workers with skills."

Although the authors state the opposite, presumably basing their statement on a lack of evidence in the literature, I suppose this argument about increasing returns to scale also applies to the migration of unskilled labor.

"Brain drain" and the global mobility of high-skilled talent

Submitted by Sonia Plaza on Thu, 01/29/2009 - 16:56

Since the 1960s, much of the literature on the development impact of migration has focused on ‘brain drain,’ the emigration of qualified professionals from developing countries and the subsequent loss of skills (which occurs faster than the replacement rate).

In the late 1990s, the literature shifted from brain drain to ‘brain gain,’ exploring the potential benefits of skilled migration arising from remittances, return migration, creation of trade and business networks, and the possible incentive effects of migration prospects on human capital formation at home.  You can see an extensive review of these issues here.

The questions related to the global mobility of high skilled workers can be grouped into two areas:

  1. Brain drain/gain, and the challenge of retaining and attracting high-skilled professionals such as doctors, scientists, and engineers; and
  2. The contribution of the diaspora in fostering the transfer of knowledge, technology, and finance, including remittances. ( link to http://www1.worldbank.org/prem/PREMNotes/premnote123.pdf)

A new report from the U.S. Census Bureau on Educational Attainment states that “a larger percentage of foreign-born than native-born residents had a master’s degree or higher in 2007.”  Their numbers lead me to ask:

  • What are the challenges for the U.S. in developing, finding, and retaining talent?
  • Will foreign students continue to choose the U.S.  as a place to study or will they prefer other countries?

Newly released data from nine countries underscore the resilience of remittances

Submitted by Dilip Ratha on Thu, 01/29/2009 - 12:57

Contributions also made by Sanket

Earlier this week, several countries reported monthly data for December 2008. As shown in figure 1, these data are in line with our expectations for 2008 (outlined in Migration and Development Brief 8). For five Latin American countries together, remittances have remained almost flat. The growth of remittances to all nine countries in figure 1 taken together is exactly the same as that estimated in the brief (19.7 percent versus 20 percent).

Figure 1: Growth of remittances in 2008 for countries that report monthly data

* Actual data for Philippines and Kenya for January-November 2008; Dominican Republic for Jan-September 2008, and staff estimates for remaining months.
Source: Central banks of the respective countries and DECPG Migration and Remittances team.

The financial crisis and immigration policy: how some developed countries are coping

Submitted by Sonia Plaza on Fri, 01/23/2009 - 10:37

More restrictive immigration policies by developed country governments are being implemented as the financial crisis deepens. For example, the United Kingdom just published a bill which contains some of the following measures:

1) Migrants who are not citizens or permanent residents of the UK will not have access to full services benefits and social housing; and

2) Migrants will have to pay a levy towards schools, hospitals, and other local services so that that the new flows of UK immigrants do not put pressure on the community.

According to the UK Visa bureau, “the bill is part of the new Australian-style points –based system for immigrants introduced in stages last year, which aims to control UK immigration so that only those needed in the British economy move to the UK and no more.”

Australia may cut migrant visas as unemployment grows. In a recent interview, Australian Immigration Minister Chris Evans said that "the global financial crisis could lead to a smaller migrant intake in 2009, as demand for skilled migrants slowed."

India to Nepal remittance service launched

Submitted by Sanket Mohapatra on Wed, 01/21/2009 - 12:13

The Reserve Bank of India (RBI) announced the launch of the “Indo-Nepal Remittance Scheme” for Nepali migrants in India.  This scheme allows migrants, including those who don’t have bank accounts, to send up to Rs. 50,000 (about $1000) in a single transaction. At the receiving end, the scheme allows recipients who don’t have a bank account to receive the transfer through a designated money transfer company.  This is indeed welcome news for those interested in reducing the burden on migrants and increasing the development impact of remittances in Nepal!  
 
There is no fee for a bank-to-bank transfer through any Indian commercial bank that participates in the National Electronic Fund Transfer (NEFT) to any bank in Nepal. For receivers who don’t have a bank account, there is a minimal charge of Rs 50 for a Rs 5000 transfer (1 percent of the transfer amount) and a flat fee of Rs. 75 for larger amounts upto Rs. 50,000. 
 
When using the service, Nepali migrants need to produce some form of identification (a passport, driver's license, telephone bill, etc.) in order to comply with Know Your Customer (KYC) requirements.  Given of the large number of undocumented Nepali migrants in India, policymakers should ensure that these requirements are inclusive and not become a barrier to limiting the service only to those migrants with legal status. 

Chinese migrants in Africa (and vice versa)

Submitted by Sanket Mohapatra on Thu, 01/15/2009 - 14:16

China's trade, aid and investment linkages with Africa have increased exponentially in the last few years. China-Africa trade rose ten-fold during 2000-07 to $73 billion.  A recent research paper co-authored with my colleagues Dilip and Sonia documents China's increasing financial involvement in Africa (see box on "New Players in Sub-Saharan Africa" on page 13).

These links appear to have resulted in increased migration between Africa and China. Along with Chinese small business owners and migrant workers settling in African cities, Chinese companies involved in banking, construction, infrastructure, mining, and oil extraction projects in Africa also tend to bring along their workers.

A recent MPI study says that official figures show over 100,000 Chinese workers in Africa -- with their true size likely several times higher. However, these are not just one-way flows from China to Africa. Some 10,000 or more Africans reportedly live in a 10 square kilometer district in the Guangzhou province nicknamed "Little Africa" -- similar to the "Little Italys" and "China Towns" in major cities around the world. 

According to the political scientist Sasha Gong cited in the MPI study, Chinese migrants use four methods to migrate to Africa:

Ethiopia announces first diaspora corporate bond

Submitted by Sanket Mohapatra on Wed, 01/14/2009 - 14:36

Ethiopia announced perhaps the first sub-sovereign corporate bond aimed at the diaspora. A release by the Ethiopian Ministry of Foreign Affairs says that the bond launched on December 23rd will provide funds to the Ethiopian Electric Power Corporation (EEPCO) for investments which will increase power supply to the nation, where only 27 percent of the people currently have access to electricity.

The government-guaranteed bond will be issued for a minimum denomination of US$500, maturing in 5, 7 or 10 years (with interest rates of 4%, 4.5% and 5% respectively). The interest earned would be free of income tax.  The news that companies in developing countries are starting view migrants as a potential source of external (hard currency) finance is indeed noteworthy. I will post more details as they become available.

Sri Lankan migrants to be allowed to invest in government securities

Submitted by Sanket Mohapatra on Wed, 01/14/2009 - 13:09

Sri Lanka recently announced that it would open up the government securities market for its migrants abroad. Sri Lankan diaspora and migrant workers would be allowed to invest in rupee denominated treasury bills and treasury bonds.

The press release by the Sri Lanka central bank suggests that this measure “…is expected to widen the investor base, diversify the Government Securities market, make it more convenient for Sri Lankans living abroad to access Government Securities, and to create a more stable Government securities market. This scheme will also provide a safe and highly liquid investment opportunity for Sri Lankans living abroad, while providing them with an attractive return on their investments.”