Published on The Trade Post

Notes From the Field: Taking On Politics, Shifting Paradigms

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Editor's Note: "Notes From the Field" is an occasional feature where we let World Bank professionals conducting interesting trade-related projects around the globe explain some of the challenges and triumphs of their day-to-day work. The views expressed here are personal and should not be attributed to the World Bank. All interviews have been edited for clarity.

ImageThe interview below was conducted with Manjula Luthria, a Senior Economist in the World Bank’s Middle East and North Africa (MENA) regional division of the Human Development Network. Ms. Luthria's work focuses migration, labor mobility, and social protection. She spoke with us about her early experiences as a country economist for the Pacific Islands region, and how lessons learned there have come to inform the programs and projects her unit works on today.

Trade Post: Tell us a little bit about how you got into looking at migration as an economic issue.

Ms. Luthria: I began my career working on broader growth and competitiveness issues in East Asia, one of the more integrated regions in the world. It was only when I got to Sydney as a country economist working on eleven small Pacific Island countries that I found that the usual prescriptions that we were so accustomed to offering in the Bank—improved investment climate and the standard bread-and-butter economics—just didn’t fly in the context of isolation and small size.

You would think it’s a no-brainer, but this was ten years ago. I think we and other development partners were very much still part of that paradigm that you could shift growth into any corner of the world if you followed certain good economic principles. It just began to ring hollow in the face of that kind of extreme isolation and extreme small size.

Trade Post: How did this affect your work in the region?

Ms. Luthria: It seemed to me that the time had come to start addressing the elephant in the room, which was that it made more sense to consider the prospect of allowing people to move to where the jobs are, instead. Why was that such a radical thing? It felt sort of iconoclastic at that time. It felt perhaps a little bit too bold, at various levels. At the technocratic level, it was tantamount to saying economic prescriptions were just not sharp enough. For our bilateral donors, it was as if they were pronouncing the limits of development aid. So it really required a big re-think.

Trade Post: How did you attempt to shift the paradigm in the Pacific?

Ms. Luthria: We started to work quite closely with a group of researchers, in the Bank and outside of it, to look at the economic penalties of isolation and how much you would need to subsidize labor or capital in isolated regions in order for products or services to become competitive. The orders of magnitude were just staggering.

We also surveyed sectoral needs in nearby economies—Australia and New Zealand—and assessed how acute their labor shortages were. So, once we had armed ourselves with the research that showed how domestic job creation could not possibly absorb youth unemployment, how comparative advantage wasn’t enough to turn it into competitive advantage—only then were we not shooed out of the room when we would bring this up.

Trade Post: So you had the research. How did you turn this into implementing actual policy and projects?

Ms. Luthria: We did something quite untraditional. What really got things going was when we began working with the New Zealand government to find a particular visa category, pre-policy change, that would allow us to do a small pilot under the radar. We had done the work of moving this from a taboo topic to a “Yes, we have to consider this seriously” topic. The next hurdle was, “Yeah, but can it work in practice?”

So, we planned out our pilot by taking the idea to two key mayors who became excited about trying something new in their town. Then we sat down with several employers and floated the idea, then other local stakeholders like Rotarians to advise us on sensitive local issues. We conveyed the importance of this experiment to each of these stakeholders and asked for their cooperation, which turned out to be fantastic and invaluable.

Then we went recruiting together and stayed very hands-on during the process, using everyday experience to tweak our design and deal with implementation challenges. It was an amazing learning experience, and six months later we had proof of concept. We knew which parts were working well and which were not, and what needed to change for a national rollout. Once we did roll it out, we had our colleagues at the Bank carry out very robust monitoring and evaluation.

And all that just turned things around. These migration schemes in the Pacific were considered the most development-friendly intervention that had ever been evaluated! In three years, the earnings from these schemes alone were equivalent to half of foreign aid to some of these islands. Labor was suddenly considered a top export. It had a significant impact, and it continues to grow.

It has put in place a model that is considered pro-poor and in line with the Bank’s twin pillars of reducing absolute poverty and promoting shared prosperity. A vast number of people can increase their employment and income potential by accessing overseas labor markets and we in the Bank need to take this on as an area where international coordination is missing. We are working on a variety of labor mobility related issues now in MENA in the Euro-Med context, but also beyond—at all skill levels.

Trade Post: But isn’t this often considered too political for the Bank to work on?

Ms. Luthria: Yes, we hear this often… but really, isn’t everything political? Tax reform is political. Subsidy reform is political. Pensions, infrastructure, governance. Yet we work on all these things. We’re meant to inform and provide the technical basis for design and implementation, and fill coordination gaps in the international architecture.

Trade Post: So how can the Bank best approach the topic?

Ms. Luthria: At the end of the day, we need to talk to labor-receiving countries. I think we have to find a vocabulary and service that gets us into the tent with receiving countries—that addresses their concerns about specific labor movements. That means we need to roll up our sleeves and work on as many bilateral corridors as we can, to learn how these schemes are designed at the low-mid-high level, and what the obstacles are to their successful implementation.

Trade Post: In many ways this is similar to trade negotiations, but how does the approach differ?

Ms. Luthria: Well, for example in trade we think of tariff reform as coming first, then, sequentially, trade facilitation follows to translate market access into market entry. But in labor, I think you need labor market facilitation first. Then you might get labor market access. It’s the reverse. It kind of turns the way we approach things in trade on its head.

We’ve approached these bilateral agreements very much as trade and services agreements. I think we need to really focus on making these bilateral labor agreements. We need to do the harder work of creating the plumbing and architecture around facilitation, issues like worker and skill selection, preparation, job matching, protections—and all the difficulties of designing incentives, penalties, and capacities for such things.

This will signal to receiving countries that there is a system—that it isn’t perfect—but there is a system in place that can make these movements a win-win.

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