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How does migration shape economic and social development?

Submitted by Elina Scheja, co-authors: Dilip Ratha, Sanket Mohapatra on Mon, 02/28/2011 - 12:11

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. 

Poverty fell in Pakistan in 2001-08 partly because of remittances - Migrants can help in reconstruction after devastating floods

Submitted by Sanket Mohapatra on Thu, 08/19/2010 - 08:35

A World Bank report released on July 30 finds that poverty in Pakistan fell by an impressive 17.3 percentage points between 2001 and 2008 (from 34.5 percent in 2001-02 to 17.2 percent in 2007-08). Three out of Pakistan’s four major provinces – Khyber Pakhtunkhwa (formerly NWFP), Punjab, and Sindh – saw significant declines in poverty during this period. The largest fall in poverty was in Khyber Pakhtunkhwa (KP). According to the Bank report “high level of remittances, both foreign and domestic, seem to have facilitated” the decline in poverty in KP.

     UN Photo/WFP/Amjad Jamal

Pakistan saw migrant remittances reach a record $ 8.9 billion in fiscal year 2010, an increase of 14 percent compared to the 2009 fiscal year despite the global economic crisis (Pakistan’s fiscal year runs from July to June). The World Bank report says “Continued strong growth in worker’s remittances in the past few years has also contributed to improvements in the external current account balance” and “have facilitated improvement in the country’s external position”. 

Moving away from home... and away from poverty?

Submitted by Kathleen Beegle on Tue, 02/24/2009 - 12:03

Finding routes out of poverty remains a key issue for households and policy makers alike. A long term vision of development in Africa and elsewhere suggests that poverty reduction is associated with intergenerational mobility out of rural areas and agriculture, and into urban non-agricultural settings. To respond to new economic opportunities, people must be geographically mobile. Constraints to their movement may in fact impede economic growth.

In a recent working paper, we studied the link between physical movement and economic growth, by re-surveying 4,400 people in 2004 from the Kagera region of Tanzania who were first surveyed in 1991. We found that the returns to within-country migration are very high: consumption growth among migrants was 36 percentage points higher than among those who remained in their baseline villages.

Is this growth gap because the migrants are somehow ‘different’, perhaps more productive, than those who stay? The evidence says no, it isn’t. Moreover, while moving out of agriculture and out of remote areas is a winning strategy, we found that migration leads to economic growth for those who don’t change sectors, and, surprisingly, even for those who move to more remote areas!  Just the act of moving – presumably in part a response to economic opportunities – is important.

So why don’t more people move if economic returns to geographic mobility are so high? A number of crucial social constraints might be at work. For example, younger people with weaker household ties, unmarried and male, have more freedom to take advantage of opportunities. What is acceptable or safe for a young man might be unacceptable and jeopardize marriage possibilities for a young woman. Heads of households or their spouses also find it harder to move.

Africa Migration Project: Household surveys call for proposals

Submitted by Sonia Plaza on Tue, 10/21/2008 - 11:58

In collaboration with the African Development Bank, the World Bank is undertaking a comprehensive study of migration and remittances in Sub-Saharan Africa and destination countries outside Africa. The World Bank Household Survey of Migrants is part of this effort, and will be conducted in 10 countries (Burkina Faso, Ethiopia, Kenya, Lesotho, Mali, Nigeria, Senegal, South Africa, Ivory Coast, and Uganda). 

Findings from these surveys will provide a better understanding of the characteristics of migrants in sending and receiving countries and thereby help inform national policy-makers about trends in migration and remittances, determinants and consequences, and development impacts.

The World Bank is inviting firms to submit expressions of interest to undertake a household survey focusing on internal and international migration in at least one of the above 10 Sub-Saharan countries.  The deadline for expressions of interest is November 7, 2008, and the high quality work should be completed by June 2009. 

More information on the proposed study and how to make a submission can be obtained by downloading the detailed Terms of Reference (ToR) from the World Bank eConsultant system website, where you can look for Selection Number 100019214, "Household surveys for the Africa Migration Project." You can also read the terms of reference for this call for proposals here.

Why the development agenda must embrace migration

Submitted by Dilip Ratha on Mon, 09/29/2008 - 14:19

1. Migration is an exception rather than the rule. Only 200 million or 3% of world population are international migrants; 97% are not. Most people like to be rooted where they are born, unless they are uprooted by economic factors.

2. Over 90% of international migrants are economic migrants who have left home to work for someone abroad. The implication is that migration generates economic gains for the migrants, their employers in destination countries, and their families back home. Yet, considering that most people stay at home, migration is not a substitute for development and job creation at home.

3. Contrary to popular perception, migrants from developing countries do not always move to rich countries. About half of them reside in other poor developing countries. In other words, migration is not always "south-north".  Many developing countries have to deal with the complexities associated with not only emigration of their people, but immigration of people from other countries.

Climate change and the migration fallout

Submitted by Sonia Plaza on Mon, 08/18/2008 - 18:19

The impact of sea level rise from global warming could be catastrophic for many developing countries.  The World Bank estimates that even a one meter rise would turn at least 56 million people in the developing world into environmental refugees. 

Remittances and natural resources: apples and oranges

Submitted by Dilip Ratha on Fri, 08/01/2008 - 10:00

The July/August issue of Foreign Policy has a short feature highlighting the "dark side" of remittances. It cites an IMF study which argues:

"High levels of remittances often lead to greater corruption and irresponsible economic policies; and officials in remittance-rich countries are often let off the hook for failing to provide basic services, freeing them to divert resources for their own purposes. This gives citizens less of an incentive to demand reforms."

I am not persuaded. Is it not the other way around? When governments fail to provide basic services, people are forced to fend for themselves.
 
Remittances can buy only private services like tuition, health care, or water for the family; they cannot build roads, dams, and airports. Sometimes hometown associations or diaspora organizations fund a school or a park or a cemetery back home, but such "collective remittances" tend to be minuscule compared to the needs of the community and to the total volume of personal remittances. (The largest number I have seen for collective remittances to Mexico is about a $100 million, compared to personal remittances of $25 billion.)
 
The title of the Foreign Policy piece, "The Remittance Curse," invokes the idea of "the resource curse" which refers to rent-seeking and governance problems in resource-rich countries. Remittances, however, should not be compared to revenue from natural resources. Remittances are distributed among a large number of people. (In that sense they are akin to distributing oil money from an airplane!) And they are persistent over time, unlike natural resource windfalls. Remittances reduce poverty and lend voice to the people.

Remittances reduce poverty

Submitted by Dilip Ratha on Fri, 06/20/2008 - 10:25

I'm originally from a small village in India. There is no doubt that many of the people I knew growing up were able to survive because of the money their relatives sent back home to purchase the most basic staples. In development jargon, this money is known as remittances, but from my point of view, this money was a lifeline.

Remittances directly augment the income of those households that receive them. In addition to providing resources for the poor, they affect poverty and welfare through a whole host of indirect multiplier effects and also macroeconomic effects. The beauty of these flows is that they don't suffer from the governance problems that may be associated with official aid (i.e. the money goes from one wallet to another, sans most of the red tape in between).

On a larger scale, analysis across countries worldwide shows the significant poverty reduction effects of remittances: A 10 percent increase in per capita official remittances may lead to a 3.5 percent decline in the share of poor people.

Recent research shows that remittances have reduced the poverty headcount ratio (percent of population below the national poverty line) significantly in several low-income countries-by 11 percentage points in Uganda, 6 percentage points in Bangladesh, and 5 in Ghana. In Nepal, remittances may explain a quarter to a half of the 11 percentage-point reduction in the poverty headcount rate over the past decade (in the face of a difficult political and economic situation).

Just based on the simple figures I've referenced, does it not behoove us in the development community, especially policymakers and governments, to facilitate the investment and flow of money across borders?