Migration and Development

On days like this, I look out of the window and realize a year has gone by. And yet there is this sense of running on the same spot: Yes, we have worked very hard; but has that made a dent on the world?

Photo: istockphoto.com

For those working on migration issues, the answer isn’t very encouraging. The only good news is that remittances proved to be resilient during the crisis and are on a recovery path. But anti-immigration sentiment has deepened worldwide. In some cases, the sentiment is beginning to take a hurtful tone. What is lost in rhetoric and scapegoats is the fact the majority of migrants is neither criminal nor unwanted. That migrants are human beings and ought to be respected as such has taken a back seat in many countries with strong and democratic institutions.

On this day, the International Migrants Day, it is worth repeating the words of the UN Secretary-General: Together, let us reaffirm the fundamental principle of the Universal Declaration of Human Rights: “all human beings are born free and equal in dignity and rights”.

I was in Dubai last week when the news broke about Qatar's World Cup bid. Qatar winning the vote to host World Cup in 2022 will produce significant increases in migration flows from, and remittance flows to, South Asia, East Asia and East and North Africa.
 
Qatar employs just short of 1.5 million migrant workers currently. It is the largest host country for migrants in the world: the share of migrants in the population exceeds 85%, for every adult Qatari national, there are 10+ migrant workers (see Factbook, my earlier blog post). Although it does not report data on remittances to the IMF, newspapers quoting Qatar Central Bank reported outward remittances approaching $7 billion in 2010. The sheer increase in the demand for workers for constructing stadiums and developing infrastructure is expected to result in huge migration flows from South Asia, but also from East Asia (the Philippines, but also China). Outward remittances will rise more than proportionately, first because wages will rise, and second, because the authorities will provide greater scrutiny to recruitment practices and working conditions for migrant workers.

Photo: Istockphoto.com

The Wall Street Reform and Consumer Protection Act signed by President Obama last month has a little something for poor migrants who send money home – it includes the following:  

• Remittance service providers (RSPs) will be required to disclose to remitters the equivalent amount that will be received in local currency by the beneficiary, the exchange rate used for the remittance transaction, the cost of the transaction, and the date of delivery to the recipient.
• RSPs will need to provide consumers access to error-resolution mechanisms and remedies (including refunds). RSPs would need to provide the contact details of the relevant regulatory authority in the receipt at the time of the transfer. RSPs will also need to provide the information on pricing and error-resolution procedures in the language in which they advertize and promote their remittance services (e.g. Spanish to Mexican migrants, Amharic to Ethiopian migrants etc.).   
• Remittances will be included in the strategy for financial literacy for low-income communities, as part of the US government’s Strategy for Assuring Financial Empowerment (SAFE). 
• The Federal Reserve and Treasury will work to extend automatic clearinghouse (ACH) systems and other payment systems for remittances to foreign countries, with a focus on countries that receive significant remittance transfers from the US.  
• A report will be prepared on the feasibility of using remittance history to improve credit scores and the legal and business model barriers to such credit scoring. 

  (An excellent summary of the Act is provided by Appleseed.)

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.