The Impact of Temporary Migration on Source Countries

We quantify the home country effects of different types of temporary and permanent migration patterns using a global integrated model for three developing countries. Our results suggest that migration (whether permanent or temporary) is beneficial for income as well as for poverty reduction in the home countries as it raises remittances, labor productivity, trade, and foreign direct investment and it provides incentives for human capital accumulation. These channels offset the negative impact of “brain drain.” In the simulations, temporary migration programs yield better outcomes than permanent migration due to the productivity gains induced in the home countries by returning migrants.     

Worker Remittances and Capital Flows to Developing Countries

Worker remittances constitute an increasingly important channel for the transfer of resources to developing countries. Behind foreign direct investment, remittances are the second‐largest source of external funding for developing countries. Yet, literature on worker remittances has traditionally focused on the impact of remittances on income distribution within countries, on the determinants of remittances at a micro‐level, or on the effects of migration and remittances for specific countries or regions. Macroeconomic determinants and effects of remittances have received more attention only recently. Hence, the focus of this paper is on the macroeconomic determinants of remittances and on differences in these determinants between remittances and other capital flows. We find that remittances respond more to demographic variables while private capital flows respond more to macroeconomic conditions.     

Migration,development and remittances in rural Mexico

The argument is that remittances to Mexico from migrants in the US contribute to household prosperity and lessen the balance of payments problem. The purpose of this article is to provide an overview of the incentives and constraints to development and individual economic well-being in rural Mexico. Examination is made of the financial amount of remittances, the use of remittances, the impact on development of remittances, models of migration, and migration historically. The viewpoint is that migration satisfies labor needs in developed countries to the detriment of underdeveloped countries. $2 billion a year are sent by illegal migrants from the US to Mexico. This sum is 4 times the net earning of Mexico's tourist trade. 21.1% of the Mexican population depend in part on money sent from the US. 79% of illegal migrants remitted money to relatives in Jalisco state. 70% of migrant families receive $170/month. In Guadalupe, 73% of families depended on migrant income. In Villa Guerrero, 50% of households depended on migrant income. Migrant income supported 1 out of 5 households in Mexico. Money is usually spent of household subsistence items. Sometimes money is also spent on community religious festivals, marriage ceremonies, and education of children or improved living conditions. Examples are given of money being used for investment in land and livestock. Migration affects community solidarity, and comparative ethic, and the influence on others to migrate. Employment opportunities are not expanded and cottage and community industries are threatened. Land purchases did not result in land improvements. Migration models are deficient. There is a macro/micro dichotomy. The push-and-pull system is not controllable by individual migrants. The migration remittance model is a product of unequal development and a mechanism feeding migration. Mexican migration has occurred since the 1880's; seasonal migration was encouraged. There was coercion to return to Mexico after the economic recession of World War I; the door was firmly closely during the Great Depression of 1929-35. The 1980 estimates of illegal Mexican migrants totaled 2-9 million, which is the largest flow in the world. US industrial presence and Mexican development have reinforced migration flows. Regional and international capitalist requirements govern migration.     

Migrant remittances and development

Income remittances from migrant workers to countries of origin are central to the links between migration and development. Multiple, complex, and diverse forces, however, affect the flow of remittances. Factors may include the number and characteristics of workers abroad; levels and types of economic activity in sending and host countries; differential wage, exchange, and interest rates; political risk; and the facility for transferring funds. These factors then shape personal decisions made by migrants and their families regarding remittances, after which any longer-range development consequences of remittances may result. Debate rages over the effects of remittances on development. This paper therefore reviews papers on the measurement of remittances and gives recent findings on the volume and direction of flows. It continues by considering evidence on the uses of remittances and their consequences for development, and closes with a discussion of policy options for increasing and channeling remittance flows.     

Managing Migration: The Role of Economic Instruments

This paper reviews economic policies and instruments available to the developed countries to reduce unwanted migration from developing countries, not all of which is irregular migration. Countries generally welcome legal immigrants and visitors, try to make it unnecessary for people to become refugees and asylum seekers, and try to discourage, detect, and remove irregular foreigners. There are three major themes: 1. There are as many reasons for migration as there are migrants, and the distinction between migrants motivated by economic and non–economic considerations is often blurred. Perhaps the best analogy is to a river – what begins as one channel that can be managed with a dam can become a series of rivulets forming a delta, making migration far more difficult to manage. 2. The keys to reducing unwanted migration lie mostly in emigration countries, but trade and investment fostered by immigration countries can accelerate economic and job growth in both emigration and immigration countries, and make trading in goods a substitute for economically motivated migration. Trade and economic integration had the effect of slowing emigration from Europe to the Americas, between southern Europe and northern Europe, and in Asian Tiger countries such as South Korea and Malaysia. However, the process of moving toward freer trade and economic integration can also increase migration in the short term, producing a migration hump, and requiring cooperation between emigration and immigration destinations so that the threat of more migration does not slow economic integration and growth. 3. Aid, intervention, and remittances can help reduce unwanted migration, but experience shows that there are no assurances that such aid, intervention, and remittances would, in fact, lead migrants to stay at home. The better use of remittances to promote development, which at US$65 billion in 1999 exceeded the US$56 billion in official development assistance (ODA), is a promising area for cooperation between migrants and their areas of origin, as well as emigration and immigration countries. There are two ways that differences between countries can be narrowed: migration alone in a world without free trade, or migration and trade in an open economy. Migration will eventually diminish in both cases, but there is an important difference between reducing migration pressures in a closed or open world economy. In a closed economy, economic differences can narrow as wages fall in the immigration country, a sure recipe for an anti–immigrant backlash. By contrast, in an open economy, economic differences can be narrowed as wages rise faster in the emigration country. Areas for additional research and exploration of policy options include: (1) how to phase in freer trade, investment, and economic integration to minimize unwanted migration; (2) strategies to increase the job–creating impacts of remittances, perhaps by using aid to match remittances that are invested in job–creating ways.     

The Effect of Remittances on Economic Growth in Kyrgyzstan and Macedonia: Accounting for Financial Development

Kyrgyzstan and Macedonia have experienced a reasonable increase in remittances over the last twenty‐five years. Subsequently, the extent to which remittances can be instrumental for economic development of the two countries has gained serious attention in recent development dialogues. The aim of this study is to examine the impact of remittances versus financial development on the economic growth of the two counties, complementing the burgeoning interest and focus on remittances for policy. The short‐run and the long‐run effects and the causality dynamics of remittances and financial development, are explored. The results show a long‐run positive impact of remittances on the economic growth of these countries. The impact of financial development is negative, significant only for Kyrgyzstan and not statistically significant for Macedonia. The causality results show that remittances support economic growth for Kyrgyzstan, whereas economic growth appears to propel remittances for Macedonia.     

Transatlantic Roundtable on High–skilled Migration and Sending Countries Issues

Globalization and the advent of the knowledge economy have created a new context where there is a greater demand for the highly skilled, especially in the information technology (IT) industry. High–skilled migration has become increasingly more complex, even if in recent years the term "brain drain" has become a generic reference to "high–skilled migration" of all types. It has also become clear that brain mobility does not automatically translate into "brain drain", and that impacts vary by the types of skills held by migrants.
The meeting demonstrated that while much is known about high–skilled migration and its effects on source countries, there is also a great deal yet to be learned in a dynamic environment. Many participants deplored the lack of reliable data, which makes it difficult to know what is really going on and to establish appropriate policies. Clearly, there are an array of policies that can offset possible adverse effects of skilled mobility and even leverage the flow into positive outcomes for source countries. A key element is improvement of the population's general level of education. Low levels of skills keep average labour productivity and wages low and therefore retard development. Long–term strategies to promote economic growth are needed to enable developing countries to retain and draw back their highly skilled and address the negative effects of the brain drain. Migrants themselves can play an important role through their remittances, diaspora networks, and own willingness to return – at least temporarily — to share their skills and contribute to economic progress. Finally, destination countries can facilitate the process through policies that promote circulation of highly skilled migrants.     

The new economics of labour migration and the role of remittances in the migration process

This analysis considers international migration remittances and their impact on development in migrant-sending areas. The new economics of labor migration (NELM) posit that remittances lessen production and market constraints faced by households in poor developing countries. The article states that remittances may be a positive factor in economic development, which should be nurtured by economic policies. The impact of remittances and migration on development varies across locales and is influenced by migrants' remittance behavior and by economic contexts. Criteria for measuring development gains may include assessments of income growth, inequity, and poverty alleviation. It is hard to gauge the level of remittances, especially when remittances may not flow through formal banking systems. The International Monetary Fund distinguishes between worker remittances sent home for over 1 year; employee compensation including the value of in-kind benefits for under 1 year; and the net worth of migrants who move between countries. This sum amounted to under $2 billion in 1970 and $70 billion in 1995. The cumulative sum of remittances, employee compensation, and transfers was almost $1 trillion, of which almost 66% was worker remittances, 25% was employee compensation, and almost 10% was transfers during 1980-95. Total world remittances surpass overseas development assistance. Remittances are unequally distributed across and between countries. Migration research does not adequately reveal the range and complexity of impacts. Push factors can limit options for use of remittances to stimulate development.     

Remittances in Ghana: Origin, Destination and Issues of Measurement

Few studies on remittances have focused on sub-Saharan Africa. This paper analyses a nationwide survey of 5,998 households to determine the characteristics of both internal and overseas remittances in Ghana. Particular attention is paid to the poverty-alleviation potential of remittances. Furthermore, this study uses a smaller scale pilot project with a matched sample of senders and receivers of remittances to identify some problems with using household-level surveys to assess the volume and impact of overseas remittances, and offers some suggestions as to how to handle these problems. The paper estimates that foreign remittances may be three times as large as Bank of Ghana estimates, bringing Ghana on par with large remittance receiving countries such as the Philippines and Mexico. The paper concludes that while foreign remittances are larger in value, locally sent remittances reach poorer segments of the population. Both foreign and local remittances are unevenly geographically distributed, being received more in the centre and southern regions than in northern Ghana where the poorest regions are. The paper argues a need to study multiplier effects of foreign remittances, as these can be large and eventually accrue to rural populations.     

The Role of Migrant Remittances in Development: Evidence from Mediterranean Countries

Given the persistent problems in the balance of trade in LDCs, the limited effect of foreign aid, and the difficulties of borrowing, the often huge amounts of migrant remittances can substitute for the inadequacies of these forms of foreign exchange. As market flows of foreign exchange, remittances have complex positive and negative effects on development. In this paper, I deal with this role of migrant remittances in the theoretical framework of development economics, as related to the importance of foreign exchange as an indispensable factor of growth and structural change in LDCs. Various channels transmitting the impact of remittances on development are investigated based on the experience of countries from both sides of the Mediterranean basin.     

Overseas workers' remittances in Asian development

In recent years, overseas workers from Asia have been sending remittances of about $8 billion annually to their home countries. These remittances are an important source of precious foreign exchange for the major labor-exporting countries. The overall development impact of remittances, however, has not been well established. Remittances are spent primarily on day-to-day consumption expenditures, housing, land purchase, and debt repayment. Although only a small proportion of remittances are directed into productive investments, this does not warrant the conclusion that the developmental value of remittances is negligible. In fact, remittances spent on domestic goods and services Asia provide an important stimulus to indigenous industries and to the economies of the labor supplying countries. It is these broader macroeconomic benefits of remittances which seem to have been largely ignored in the literature, and this perhaps explains the pessimistic view of the developmental value of remittances. Reservations concerning the effects of remittance on the sending countries include the fears that 1) expenditure patterns of remittance receiving households may create a demonstration effect whereby nonmigrant households may increase consumption, 2) remittance inflow will increase income and wealth inequalities, 3) remittance expenditures may result in inflation, 4) remittances may produce only short-term fluctuations in long-term economic development, and 5) remittances may adversely affect agricultural development.     

The case of Asian migrants to the Gulf Region

International migration from Asia to the Gulf Region is desirable and has benefited both individuals and the countries. At the individual level, migrants benefit economically and socially. They earn more income and are able to improve the quality of life of their family members when they return home. Although there are cases of negative impacts of international migration, such as fraud and corruption, as well as broken homes and extravagance, in general most migrants benefit and the experiences are worthwhile. Available data indicate that there are occupational shifts, a change in attitude towards community life, the world situation, and attainment of goals. At the national level, international migration has brought in foreign exchange and helped reduce unemployment. In addition to facilitating and making the pre-migration phase as easy as possible, activities of government during migration and post-migration phases are also required if the government is truly to promote international migration. Establishment of the post of Labor Attache in embassies will support migrants while they work abroad by providing services and moral support, thus making adjustment in host countries easier. Upon returning home, the government can provide consulting services to returnees on investment possibilities and may be able to tap resources form returnees for overall development. Granted that returnees are ordinary people with not much savings, remittances in foreign currency sent home have reduced financial difficulties in the home country. International migration is seen by the author as a rite-of-passage. This is an activity or an educational experience which happens once or twice in a lifetime and is not repeated. There must be a revolving system where young people migrate to work, gain experience, earn extra income, and return to settle down, bringing with them the benefits gained while working abroad. Data collected from this study show negative social impacts, especially when migration covers a long period in one's lifetime. In promoting international migration, the government therefore has to help returnees settle down and treat international migration as an educational experience.     

Migration Plans and Received Remittances: Evidence from Fiji and Tonga1

This paper investigates the relationship between remittances and migration intentions in the source country using data from households in the Pacific island countries of Tonga and Fiji. Unlike previous research it accounts for potential endogeneity in the relationship between remittances and intentions and also includes households that receive remittances but do not have current migrants. We find a positive impact of remittances on intentions. The impact of remittances on intentions is stronger in a country with a longer history of migration and stronger in households with current migrants than those without migrants. These results provide new evidence on the role of remittances in the development of migration chains.     

The impact of the Gulf war on migration and remittances in Asia and the Middle East

The author discusses the impact of the 1990 Gulf war on the migrant worker populations in the region, with a focus on migration and remittances in Asia and the Middle East. Both immediate and long-term effects are considered. "From the perspective of foreign migrant communities living in the Gulf...the war...was much more of a disaster for Arabs than for Asians....Arab migrant populations...were dramatically affected by the Gulf crisis. In contrast, the Asian migrant community was largely concentrated in Saudi Arabia and the [United Arab Emirates] and remained relatively less affected by the crisis. Subsequent polarization in the Arab world gives Asian labor-exporting countries an unexpected opportunity to increase their share of Gulf labor markets still further in the coming years." (SUMMARY IN FRE AND SPA)     

Remittances and Other Financial Flows to Developing Countries

Official estimates of migrants’ remittances are around US$100 billion annually, with some 60 per cent going to developing countries. Any policy making use of migrants as a development resource must understand the size and allocation of remittances, and the roles played by migrants and their communities in the remittance process. This paper examines the flows of remittances in relation to other financial flows to developing countries. The examination is based on data available from official statistics. As discussed in the paper, remittances by unofficial channels are significant by all accounts so the remittance amounts reported here are quite conservative. The paper shows that annual remittances to developing countries have more than doubled between 1988 and 1999. Viewed over the last decade, remittances have been a much larger source of income for developing countries than official development assistance (ODA). The gap is increasing, since ODA has been falling while remittances have increased. Furthermore, remittances appear to be a much more stable source of income than private flows, both direct and portfolio, which tend to be more volatile and flow into a limited set of countries. Remittances to developing countries go first and foremost to lower middleincome and low–income countries. Lower middle–income countries receive the largest amounts, but remittances constitute a much higher share of total international flows to low–income countries. Of the ten countries receiving most remittances, two are low–income (India and Pakistan); six are lower middle–income (Philippines, Turkey, Egypt, Morocco, Thailand, and Jordan); and two are upper middle–income (Mexico and Brazil). Sub–Saharan Africa received some 8 per cent of remittances in 1980, but only some 4 per cent in 1999. South Asia’s share also declined from what was already a relatively high 34 to 24 per cent. Those who gained most were Eastern Europe and Central Asia, South and Central America, and the Caribbean, which increased their share of global remittances.     

The Migration–Development Nexus: Sri Lanka Case Study

This paper explores the relationship between migration and development in Sri Lanka, a country that has been the source of large numbers of migrants and the recipient of much development assistance. Commissioned as part of a wider study conducted by the Centre for Development Research, Denmark, this case study seeks to answer a set of specific questions about the nature and extent of links between development assistance and migration flows. The paper surveys the socio–economic context in which both migration and development have taken place in Sri Lanka, describing the causes, scale, and features of migration flows from Sri Lanka in recent decades. Two main streams of migration flows are identified: labour migration and political migration. The flows are distinguished by ethnic characteristics (the former is mostly Sinhalese and the latter pre–dominantly Tamil) and destination (the former to the Middle East and the latter to the West). Both flows have intensified during a time of protracted conflict and in the context of waraffected economic development since the early 1980s.
The importance of remittances from migrants to the Sri Lankan economy and the extent to which diaspora activities impact Sri Lanka are also discussed. Despite the lack of statistics, especially on informal remittances from the Tamil diaspora, it is suggested that the remittances have been and will continue to be a sizeable component of foreign exchange receipts in Sri Lanka. The paper concludes that the complex interactions between migration, development assistance, remittances, and conflict are important for the prospects for peace and reconstruction in Sri Lanka. The challenge in Sri Lanka will be to move from a vicious cycle of conflict, underdevelopment and migration to a more virtuous one. In this process, it is suggested that the diaspora will be a key player in the shift towards peace and remittances will be an integral part of reconstruction.     

India: ‘Brain Drain’ or the Migration of Talent?

2 views on "brain drain" exist: 1) LDCs lose their enormous investments on higher education when skilled people migrate to other countries and 2) LDCs are exaggerating the problem and only a few skilled people migrate at 1 time. India does not completely lose its investment in education when professionals migrate, since the migrants still contribute to knowledge and also send remittances to relatives in India. Unemployed educated people would cause a greater drain on India's resources than educated migrants. The author prefers the phrase migration of talent to brain drain, since the former indicates a 2-way movement. Most migrants from LDCs are students. About 11,000 university graduates leave India every year for advanced study and/or work. A conservative estimate is that 2500 will remain abroad permanently. Most professionals who migrate go to the US and Canada. Factors promoting migration include 1) unemployment, 2) immigration rules, 3) colonial links, 4) financial incentives and material benefits, 5) pursuit of higher education, 6) improvement of working conditions and facilities, 7) avoidance of excessive bureaucratic procedures, and 8) compensation for the mismatch between Indian education and employment. Reasons for returning to India include 1) deference to wives who were unable to adjust to a foreign way of life, 2) contributing to Indian development, and 3) racial discrimination. It will probably not be possible to lure back migrants who left for material reasons. Attractive job offers could entice back those who left for advanced training. To encourage the return of those who left to pursue high quality research, India must 1) increase expenditure on research and development, possibly through the private industrial sector, 2) promote travel to other countries for professional enrichment, and 3) improve conditions of research work. The article concludes with an analysis of migration of talent from 3 perspectives: 1) the individual, 2) the nation-state, and 3) the world as a whole.     

Improving the contribution of migrant remittances to development: the experience of Asian labour-exporting countries

"The purpose of this paper is to review policy initiatives [concerning migrant remittances] in six major labour-exporting countries in Asia--Bangladesh, India, Korea, the Philippines, Pakistan, Sri Lanka, and Thailand. Where relevant, the experience of these countries will be compared and contrasted with those of labour-exporting countries in other parts of the world....[The author concludes that] the imposition of mandatory remittance requirements on migrant workers is unlikely to enhance remittance inflows unless the government of the labour-exporting country effectively controls the migration process." (SUMMARY IN FRE AND SPA)     

Migrants' remittances and their use

This report, prepared at the request of the Organization for Economic Cooperation and Development (OECD), examines how remittances flow from employing countries to migrants' countries of origin and how they are used. The migrants examined largely come from Morocco, Turkey, Tunisia, Yugoslavia, Algeria, Portugal, Spain, and Italy, and work in France, Germany, Belgium, Austria, Sweden, and The Netherlands. Part 1 of the paper collects basic data on the finance flows formed by migrants' remittances, as measured by the balances of payment of the countries exporting and receiving manpower. These flows are related to such concepts as savings for real tranfers. The article also analyzes their composition, evolution over the past decade, and economic significance. Part 2 examines the use to which funds transverred and brought home from abroad are put by the income-producing migrants. Reports, field surveys, and expert communications supply data to examine whether such capital is invested to aid economic development. Part 3 explains how financial and economic flows from employing countries can play a positive role in the the development of the countries of origin and how international cooperation can assist. Recent changes in the migration policies of the main countries of employment, which now offer incentives to foreign manpower to encourage their return to emigrating nations, make the topic of this report especially timely.     

The Migration–Development Nexus: Evidence and Policy Options

Migration and development are linked in many ways – through the livelihood and survival strategies of individuals, households, and communities; through large and often well–targeted remittances; through investments and advocacy by migrants, refugees, diasporas and their transnational communities; and through international mobility associated with global integration, inequality, and insecurity. Until now, migration and development have constituted separate policy fields. Differing policy approaches that hinder national coordination and international cooperation mark these fields. For migration authorities, the control of migration flows to the European Union and other OECD countries are a high priority issue, as is the integration of migrants into the labour market and wider society. On the other hand, development agencies may fear that the development policy objectives are jeopardized if migration is taken into consideration. Can long–term goals of global poverty reduction be achieved if short–term migration policy interests are to be met? Can partnership with developing countries be real if preventing further migration is the principal European migration policy goal? While there may be good reasons to keep some policies separate, conflicting policies are costly and counter–productive. More importantly, there is unused potential in mutually supportive policies, that is, the constructive use of activities and interventions that are common to both fields and which may have positive effects on poverty reduction, development, prevention of violent conflicts, and international mobility. This paper focuses on positive dimensions and possibilities in the migration–development nexus. It highlights the links between migration, development, and conflict from the premise that to align policies on migration and development, migrant and refugee diasporas must be acknowledged as a development resource.