AT A GLANCE: - International migration, the movement of people across international boundaries, has enormous implications for growth and welfare in both origin and destination countries.
- Nearly 200 million people live outside their country of birth. Income differentials, as well as political and demographic forces, have the strongest effect on migration patterns. The major issues surrounding migration include how to minimize the disruptive effects of large-scale international migration and how to enhance its development impact.
- Remittances to developing countries are forecast to fall from an estimated $305 billion in 2008 to $290 billion in 2009; however, they will still outstrip private capital flows and official development aid. Remittances are "resilient" because many migrants are unlikely to leave their adopted countries and will continue to send money home.
- Remittances are expected to amount to about 1.8 percent of GDP for developing countries in 2009, a slight drop from 1.9 percent in 2008. However, considering that officially recorded remittances registered double-digit annual growth in the past few years, the expected fall will cause hardships in many poor countries.
- Research suggests that the economic gains from migration for both developed (receiving) and developing (sending) countries are significant even for relatively small increases in the workforces of OECD countries, and that relative gains are much higher for developing-country households than rich-country households.
- Massive migration of highly-skilled citizens—the so-called "brain drain"—poses troubling dilemmas for many smaller low-income countries. For example, 8 out of 10 Haitian- or Jamaican-born college graduates live abroad.
- Remittance flows represent the largest source of foreign exchange for numerous countries.
- Governments should treat remittances like any other source of private income. As remittances are private transactions they should not be thought of as a substitute for debt or aid flows.
- Reducing the cost of remittance transfers produces significant benefits to the migrants' families. In addition to raising consumption levels, the steady stream of foreign currency improves a country's creditworthiness for external borrowing.
- World Bank efforts to improve migration data include developing the most comprehensive database on skilled migration to date, based on census and survey data from OECD countries and—in collaboration with the UN Population Division—a bilateral matrix of global migration flows, including South-South migration and various extensions along gender and age-of-migration dimensions.
Overview Migration has attracted increased interest among policymakers, due to both the recent growth in remittance flows and the migration-related concerns in both developed and developing countries. Insights that have emerged on migration and remittances include the following. - Income differentials, as well as political and demographic forces, have the strongest effect on migration patterns. When permitted, migration is a major economic equilibrating mechanism.
- International migration boosts world incomes. By allowing workers to move to where they are more productive, migration results in an increase in aggregate output and income.
- Remittance rates tend to vary with the transaction costs as well as with the extent of need, that is, the income gaps between family members in the host and home countries.
- Remittances generally reduce the level and severity of poverty.
- Remittances frequently lead to higher human capital accumulation, investment, and entrepreneurship, reduce child labor, and help households to be better prepared for adverse shocks such as droughts and cyclones.
- The brain drain exhibits significant regional differences and dynamics, with more serious implications for economically isolated and smaller low-income countries.
- Diasporas can be an important source of trade, capital, technology and knowledge for their countries of origin.
World Bank Initiatives on Migration and Remittances The World Bank's initiatives on migration and remittances focus on issues such as the determinants of migration, the impact of migration and remittances on economic growth and development, brain drain, temporary movements of people, the link between trade, foreign direct investment (FDI) and migration, social protection, and governance. The Bank research program on migration aims to identify and analyze the development impact of migration so as to identify policies, regulations and institutional reforms in both receiving and sending countries that will lead to superior development outcomes. Areas of research include host country and sending country migration policies, and the impacts of migration, the brain drain and diaspora on human capital, fertility, productivity growth, provision of healthcare services, and institutional development. This is complemented by an active work program on remittances that aims to improve existing remittance data, reduce transaction costs, and enhance the integrity of money transfer systems. The World Bank has been actively engaged in efforts to develop global policy coherence on the treatment of migration via greater partnerships and coordination. It co-chaired (with the Bank for International Settlements) a taskforce for international coordination of remittance payment systems. Along with several other international organizations, the Bank is a member of the Global Migration Group. It has also provided technical inputs to the G-20's Study Group on Labor Mobility and Demographics. It was closely involved with the first and second meetings of the Global Forum on Migration and Development held in Brussels in July 2007 and in Manila in October 2008, and is currently involved with the third meeting to be held in Athens in November 2009. The World Bank has also co-organized and actively participated in a number of major international conferences on migration and development. In July 2008, the Bank was invited by the G-8 countries (at the Hokkaido Toyako summit) to facilitate and coordinate a Global Remittances Working Group (GRWG). The GRWG is chaired by Michael Klein, Vice-President of Financial and Private Sector Development, and is supported by a secretariat and an advisory committee composed of international experts. Four thematic working groups have been established (each coordinated by a representative from the World Bank Group) on: (a) data; (b) interconnections with migration and development, and policy; (c) payment and market infrastructure; and (d) remittance-linked financial products and access to finance. The first meeting of the GRWG was held on February 5, 2009; its initial activities will provide inputs for the G-8 Summit in July 2009. Economic and sector work on migration and remittances has been undertaken in several regions, including (a) regional studies on Latin America & the Caribbean, Eastern Europe and Central Asia, the Middle East and North Africa, and East Asia and the Pacific, (b) prospective diagnostic studies on good practices and the capacities of governments to manage migration, and (c) country assistance strategies in Albania, Nepal and Tajikistan, among others. Together with the African Development Bank, the Bank has established a multi-donor trust fund for studying Migration, Remittances, and Development in Sub-Saharan Africa. Recent Bank Publications on Migration and Remittances - Shaping the Future: A Long-Term Perspective of People and Job Mobility for the Middle East and North Africa (March 2009), finds that there will be large demographic and labor force imbalances, which may lead to a sharp acceleration of job and labor mobility. It develops a policy framework to help both sending and receiving countries to start preparing now to weather future imbalances.
- Remittances and Development: Lessons from Latin America (April 2008) examines the profile of remittance recipients, and finds that some of the positive effects of remittances include improvements in education and health indicators, higher savings, increased macroeconomic stability and entrepreneurship, and reductions in poverty and social inequality.
- Migration and Remittances Factbook (March 2008). The Factbook provides a snapshot of migration and remittances for all countries, regions and income groups in the world.
- The International Migration of Women (November 2007). This volume assesses the state of the research in this area, presents studies on the determinants of female migration from Mexico as well as studies on the impact of women's migration in Ghana and Mexico. It also examines labor market participation rates and performance of female migrants in the US.
- International Migration, Economic Development & Policy (2007) presents a global database on bilateral migration; four studies of the effects of migration and remittances on El Salvador, Pakistan, twelve Latin American countries, and on Morocco, Egypt, and Turkey; an examination of host country migration policies in Switzerland and New Zealand and their impact on migrants; and studies on return and circular migration.
- South-South Migration and Remittances (2007) reports that nearly half the migrants from developing countries live in other developing countries and nearly 80 percent of South-South migration is between countries with contiguous borders. South-South remittance costs are even larger than those of North-South remittances. The report is accompanied by a dataset on bilateral migration stocks and remittance flows for 212 countries.
- At Home and Away: Expanding Job Opportunities for Pacific Islanders through Labor Mobility (2006) details the need and manageability of temporary migration schemes for citizens of small remote islands in the Pacific. The report analyzes whether it is possible to design practical labor mobility programs that balance the benefits of migration with the concerns of sending and receiving countries. A pilot scheme is being implemented for temporary seasonal unskilled labor migration between some Pacific countries (Vanuatu and Tonga) and a neighboring high-income country (New Zealand) that wants workers and is interested in developing the Pacific region.
- Migration and Remittances in Eastern Europe and the former Soviet Union (2006) identifies patterns of migration over the past 15 years in the region. A key focus is on finding a way to match supply and demand in international labor. The authors explore circular migration, the brain drain, and the relation between demographics and migration.
- Global Economic Prospects 2006: Economic implications of Remittances and Migration (2005) presents evidence that an increase in migrants that would raise the work force in high-income countries by 3 percent by 2025 could increase global real income by 0.6 percent, or US$356 billion. To achieve these gains (higher for developing-country households), the report proposes that developing countries seek agreements with countries to which their nationals migrate, to improve the conditions under which they cross borders, seek and maintain employment, and send a part of their earnings home.
- International Migration, Remittances and the Brain Drain (2005). Three country cases—on Mexico, Guatemala and the Philippines—show that remittances reduce poverty and increase spending on education, health and investment. A more complex picture emerges when the study's focus shifts to the "brain drain" of educated migrants from developing countries. Smaller low-income countries, such as Haiti and Jamaica, tend to suffer greater brain drain than larger countries like India and China. Australia, Canada and the US benefit from high shares of skilled immigrants, while their net inflow into the EU is close to zero. Analysis of brain waste shows that skilled immigrants from more distant countries, with better educational systems, and where the language of destination countries is used, obtain better jobs. Foreign students and skilled immigrants contribute to US technological growth.
- The Development Impact of Remittances in Latin America (2006). This report reviews recent trends in remittance flows to the region, explores the profile of recipients, and analyzes the impact of these flows on poverty, inequality, economic growth, household behavior, financial development, and competitiveness. The report discusses the various challenges faced by policy makers in their attempts to maximize the development impact of remittances.
- Remittances: Development Impact and Future Prospects (2006) is the first such volume dedicated to the global remittance policy agenda. It includes 16 influential articles including chapter 7 (pdf) of Global Development Finance 2003, which revealed that remittances were larger than ODA.
Media Contacts:
Merrell J. Tuck-Primdahl
(202) 473-9516
Email: mtuckprimdahl@worldbank.org Kavita Watsa
(202) 458-8810
Email: kwatsa@worldbank.org Updated April 2009 |
