Elina Scheja's blog

Migration has a profound impact on the lives of the migrant households, but also their societies are shaped by the cumulative effects of labor mobility and consequently remittances. Literature provides interesting insights into the true development impact of migration. Dilip was asked to provide a background document assessing the state of the current knowledge for a roundtable discussion at the Civil Society Days of the Global Forum of Migration and Development 2010 held in November in Puerto Vallarta, Mexico. This resulting paper (co-authored with me and Sanket) has since then been revised and recently published as a World Bank working paper.

In the paper we have reviewed a variety of studies representing different aspects of migration in order to distill key messages and new insights. Main observations arising from the survey are:

For a sending country, migration and the resulting remittances lead to increased incomes and poverty reduction, improve health and educational outcomes, and promote productivity and access to finance. Although individual variation exists, the economic impact is primarily and substantially positive. Yet, these gains come at a substantial social cost to the migrants and their families as migration may lead to eroded family structures, children losing parental care, and weaker safety nets. 

Photo: istockphoto.com

Right after the holiday season Greece announced their controversial plan to build a 12 km long wall to stop the flood of illegal immigrants to the EU. The wall will cover only a fraction of the total length of the border and is aimed to be built in the area that is worst affected by illegal border crossings estimated to amount to 350 people every day, making Greece the leading entry point of illegal immigrants to the EU. As provocative as it may sound, in an economy that is suffering from severe difficulties and rampaging unemployment figures, blocking immigrants from entering is becoming one of the priority political actions to moderate fiscal expenses that is visible to the domestic population. Even though opponents have raised loud objections against the project, according to a recent poll 59 percent of the Greeks approved of the plan. And one has to admit it has an intuitive appeal of simplicity and logic: once you close the drain the flow will stop. Yet, as simple as it may sound, this is not how it works.
 

Photo/Istockphoto.com

Having followed the debate on welfare and economic policy prior to the Swedish parliamentary election, the arguments from both the ruling center-right alliance as well as the left-of-center opposition seemed convincing enough to be considered for the next political leaders of the country. The opinion polls were predicting a tight outcome in slight favor of the ruling coalition. On Sunday the votes were counted and the results surprised everybody: 2010 ended up being a historic election with no clear winners, but only one big setback. Even though the ruling alliance got a renewed mandate as the largest coalition, it failed to get the majority of the seats in the parliament. The leading opposition party, the Social Democrats, preserved its status as the largest party in the country, but thanks to the strong alliance formed by the center-right coalition, it will be unable to take over the country’s political leadership. The real winner of the election, however, was the anti-immigrant ultra-right wing party Sweden Democrats. The party got 5.7 percent of the votes that guarantees it the swing vote in the parliament making both the established party coalitions dependent on their support. Even though all established parties have categorically stated that they will not seek support from the Sweden Democrats, their passive support will be required for any majority decision.

Yesterday I attended a seminar organized by the Growth Commission on “Ingredients for Successful Growth Strategies – Equity, Globalization and Leadership” chaired by Otaviano Canuto. As a part of the opening remarks Nobel laureate Michael Spence made it clear that inclusiveness is an integral part of any growth strategy and a necessity for achieving high levels of growth. In (on average) middle income countries where income inequalities are pronounced one finds two economies operating simultaneously:  the upper class resembles OECD economies characterized by low levels of growth, while the poorer majority live in a low-income economy with little resources to grow. As a result, the economy as a whole grows at a suboptimal level until these two groups can be remerged and the middle-class is re-established.

Even though migration brings about large overall gains globally, whether or not it has a positive impact on growth in a given country has caused more controversy in the empirical literature. The answer depends on the country specific circumstances, and the type of the study. Often the analysis is limited to one specific aspect of migration ignoring the other, possibly more influential indirect channels through which migration impacts growth dynamics. A holistic context specific analysis is needed to inform the policy choices that set up the most favorable conditions ensuring that migration dynamics contribute to an inclusive growth process.

One of the most influential current frameworks for context-specific growth analysis has been the Growth Diagnostics by Hausmann, Rodrik and Velasco. This framework has been further adjusted for inclusive growth diagnostics by Sida and the World Bank. The main difference between traditional and poverty reducing growth diagnostics is that the inclusive analysis takes the individual rather than the firm or the economy at large as the analytical starting point, and argues that the way for sustainable and inclusive growth goes through productive employment. Finding ways to enhance individuals’ ability to participate in, contribute to, and benefit from growth through productive self- or wage employment becomes the focus of the analysis.