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Migration and Development: A Role for the World Bank Group

Dilip Ratha's picture
Ahead of the UN General Assembly’s Summit on “Large Movements of Refugees and Migrants” on September 19, 2016 and the Leaders’ Summit on September 20, 2016, the World Bank Group has released a paper “Migration and Development: A Role for the World Bank Group”. The objectives of the paper are (i) to describe three major drivers of international migration; (ii) to highlight the benefits and costs associated with global labor mobility in both sending and receiving countries; (iii) to sketch the global architecture for governance of migration; and (iv) to suggest areas in which the Bank could design context-specific solutions to migration problems.

Two global compacts are to be discussed at the September 19 summit, one on safe, orderly, and regular migration; the other on refugees. The paper addresses the first of the two. It also acknowledges the common challenges and vulnerabilities faced by irregular migrants, smuggled and trafficked migrants, unaccompanied child migrants, stranded migrants, and migrants displaced by disasters and environmental change.
 

The drivers of migration

There are 250 million international migrants around the globe, of whom 21.3 million are classified as refugees. South-South migration is larger than in South-North migration. Intra-regional migration is large in Europe and Central Asia, the Middle East and North Africa, and Sub-Saharan Africa. Many of the Bank’s client countries – for example, India and South Africa – are large destination countries for migrants.
Income gaps and inequality, demographic imbalances, and environmental change suggest that migration pressures will continue for the foreseeable future. (Fragility, conflict, and violence are also drivers of migration. They are not the focus of this paper, but are briefly discussed.) In 2015, the ratio between the average income of the high-income countries and that of the low-income countries stood at 70:1. It will take decades before these gaps are closed.  

A well-documented demographic divergence separates high-income countries and the developing countries, especially those in Africa and Asia. In Western Europe today we find one 20-year-old for every 65-year-old – and this ratio is projected to be halved by 2040. But the ratio is 4:1 in India and 7:1 in Nigeria. Population aging will produce large labor-market imbalances and fiscal pressures in high-income countries as the tax base narrows and the cost of caring for the old surges. On the other hand, developing nations with growing pools of young people will need to create large numbers of jobs to reach their targets for poverty reduction and growth. The working-age population (15+) in the developing countries will increase by 2.1 billion by 2050. If national employment is maintained at the same rate as in 2015, only 1.2 billion of those people will find employment in their own country, leaving nearly 900 million in search of work.

Presently, climate change and weather shocks exert only a minor effect on international migration, compared with labor market factors such as wage gaps. However, increased drought and desertification, rising sea levels, repeated crop failures, and more intense and frequent storms are likely to increase internal migration and, to a lesser extent, international migration.  


Migration’s costs and benefits

Migration brings large benefits to migrants and to the countries involved. But it also brings challenges. Migrants from the poorest countries, on average, have experienced a 15-fold increase in income, a doubling of school enrollment rates, and a 16-fold reduction in child mortality after moving to a developed country.   

In the origin countries, migration lowers unemployment, opening access to more-productive and higher-paying jobs. Migrants’ remittances offer tangible benefits to origin countries. In 2015, remittance flows to developing countries reached $432 billion, more than three times the size of official development assistance. Migration also facilitates trade, investment, and transfers of technology. But migration may also involve costs, including the so-called brain drain, especially associated with the migration of teachers, doctors, and nurses.

In the destination countries, immigration increases labor and skill supply, innovation, and entrepreneurship. A recent OECD report (2013) demonstrated that immigration provided a net positive fiscal effect. In the aging societies, immigration of young workers could ease the strained pension systems and the burden of caring for the elderly.

Despite the documented benefits of immigration, many people and policymakers in destination countries fear that immigration leads to loss of jobs, imposes heavy burdens on public services, erodes social cohesion, and increases crime levels. These negative perceptions are factually incorrect or overblown. The wage and employment effects of immigration are relatively small, since migrants and natives are not competing for the same jobs; in many countries, migrants have net positive effect on government budgets; and immigrants are less likely to commit serious crimes or be behind bars than the native-born. This paper does not address issues related to national security or national identity.


A role for the World Bank Group

Historically, the global architecture for governing migration is marked by a dichotomy between refugees and migrants. And migration has not been the focus of successful multilateral agreements; instead, it has been dealt with on a bilateral basis, with receiving countries playing the leading role. 

Analysis of the World Bank Group’s past activities and consultations with partners and stakeholders suggest that the institution could contribute to the global migration agenda in four areas:: (i) financing migration programs; (ii) addressing fundamental drivers of migration; (iii) maximizing the benefits and managing the risks of migration in sending and receiving countries; and (iv) providing knowledge for informed policy making and improving public perceptions. In order to operationalize these roles, the Bank Group’s Sustainable Country Diagnostics and Country Partnership Frameworks should be viewed through a migration lens in countries or regions or sectors where outward migration, inward migration, or remittances are important. Finally, the paper provides a template for a migration diagnostic tool for origin and destination/transit countries. In the case of the receiving countries, solutions must address any impacts on local people.

The multi-faceted nature of migration will require partnerships with other UN organizations, multilateral development banks, civil society, and the private sector. Viewing migration through the lens of reducing poverty and sharing prosperity while respecting human rights can provide a unifying framework for operationalizing the Bank Group’s knowledge on migration and mobilizing its financial resources and convening power.
 

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