Enhancing the Development Impact of Migration: Issues and Policy Options

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Enhancing the Development Impact of
MigrationIssues and Policy Options

• Mr. Luca Barbone
• World Bank
• February 5, 2009

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Observations on the development impact of
migration . . .

• How and in what ways is migration important for
  development?
• What are the costs and benefits of migration for
  developing and developed countries?
• What are the strategic choices that
  countriesboth receiving and sendingare facing

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Four reasons why migration is controversial

• Migration is not happening uniformly large
  numbers of migrants leave from relatively few
  countries and move to selected destinations
• For several developing countries, out-migration
  involves a large fraction of the population.
• An even larger fraction of migration occurs
  between developing countries themselves, known as
  South-South migration
• Some of the largest movements of labor in the
  world occurs within countries

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Percentage migrants in population U.S. and
Europe attract a large portion of migrants . . .

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. . .while migrant remittances represent a large
portion of GDP in several ECA countries
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Out-migration represents a significant portion of
the population of many countries. . .
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while the flow of workers into other countries
is significant
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Migration will likely continue to increase,
because

• Increasing globalization ? greater awareness of
  gaps in living conditions ? clearer incentives
  for migration
• Improved access to transportation and
  communications ? facilitates mobility of
  individuals
• Enhanced information flows ? reduce uncertainty
  over migration prospects
• With a large share of population under 30,
  developing country workers are more responsive to
  migration incentives
• Consolidation of diasporas in higher income
  countries ? facilitates information and social
  networks required to migrate.

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Migration benefits for sending countries

• Economic growth through increased foreign
  exchange
• Income gains to migrants and reduction in
  household poverty
• Investment in human capital
• Gives possibility to investment in business
  start-ups if managed properly

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Migration benefits for receiving countries

• Improved economic efficiency and growth
• Increased labor supply (as populations in
  developing countries decline)
• Job-creation through migrant entrepreurship
• Slow down in overall wage growth and inflation

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Working-age populations in developed countries
decline . . .

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Key costs related to migration

• Macroeconomic costs potential for Dutch disease
• Relocation and other costs to individuals
• Social exclusion and effects on the family
• Deterioration of key social services

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Possible migration strategies

• Focus on the role of the sending country as an
  exporter of people, by
• Specializing in the exporting labor and remiaing
  competitive in the market for migrant work
• Financing its external accounts through
  remittances
• Training workers to match demand from abroad
• - OR -
• Focus on making the sending country more
  attractive to its citizens, by
• Implementing policy and institutional reforms to
  make the economy more competititve.
• Improving the domestic business environment
• Strengthening basic and higher skills training

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Migration issues and the current global
financial crisis

• How is the situation different than in previous
  economic downturns
• Given global nature of the problem present crises
  limits potential for alternatives
• Migrants already returning to home countries
  where job opportunites have shrunk further
• Remittances expected to decline
• Possible policy responses
• In the short term, focus on social protection
• In the medium term, agree on innovative measures
  to better target worker flows and skills
  enhancement as host countries demand
• Linkages between stimulus packages and migration
• Stimulate consumer spending
• Job creation
• Infrastructure rebuilding
• Unfreezing access to credit

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Conclusions

• Close information gaps and increase understanding
  of the effects of migration
• Refine agreements between hosting and sending
  countries to ensure the fair treatment of
  migrants
• Institute innovative policies that better target
  the needs of migrants and host countries.