International Migration as Challenge and Opportunity

By analyzing the economic implications of migration, the World Bank concludes that migrants are more of a boon than a burden to the world economy. And, if properly managed, it says migration can help reduce poverty. By Lisa Schlein

Widespread fears of job losses and global security concerns are increasingly pushing governments to restrict immigration. More and more nations are tightening controls on national borders in an effort to keep out migrants who, they claim, create social problems and are a drain on their economies.

This year's World Bank report on Global Economic Prospects shatters this widely held view. If properly managed, the report says migration can even be a powerful force for poverty reduction.

Economic arguments, notably about benefits and costs of migration, can play a critical part in policy making. Unfortunately, the debate is often preemptively hijacked by negative, populist slogans.

Gervais Appave is Director of the International Organization for Migration's Policy and Research Program. He says emotional, xenophobic debates hinder the formulation of sound and balanced migration policies.

Current knowledge about the benefits and cost of migration remains inadequate, diffuse and often confusing which in turn aids the cause of those politicizing the debate and helps to create a vicious circle.

Remittances exploding

It's for this reason, that Mr. Appave praises the World Bank's strictly economic approach toward migration. He says it's hard to argue with figures. And the figures show that the world's 200 million migrants contribute an estimated two trillion dollars to the economies of the countries in which they work.

Furthermore, the Bank's Director of Development Prospects, Uri Dadush, says remittances – the money sent by migrants back to their home countries – are exploding.

In 2005, Dadush explains, developing countries received 167 billion dollars of remittances, which represent a doubling over the last five years.

"There are at least another 50 percent of remittances (…) that goes through informal channels", Dadush goes on to say. "And, of course, this makes remittances the single-most important financial flow directed at developing countries, much bigger than development aid, bigger even than foreign direct investment. Remittances are a relatively stable source of foreign exchange. (…) It makes them especially valuable from the standpoint of financing long-term development."

The report says an increase in the number of migrants would increase the work force in wealthy countries by three percent in 2025. And, this would increase global real income by 356 billion dollars. This is more than what would be gained from liberalizing world trade.

The "South-South Flow"

The report points out that 30 to 45 percent of the money migrants send home goes from one developing country to another, the so-called South-South flow. Mr. Dadush says the countries receiving the most in recorded remittances are India, China, Mexico and the Philippines.

"But what is even more striking is that several smaller economies depend critically for remittances on their livelihood", Dadush relates. "So you see here that countries such as Lesotho and Haiti get 25 percent of their GDP in remittances. In fact remittances are larger than any single commodity export in 28 developing countries.

Drop in poverty

Mr. Dadush says the money migrants send home has a very important impact on development in general. He also notes that remittances have resulted in a significant drop in poverty in several countries, particularly in Uganda, Bangladesh and Ghana.

"A ten percent increase in remittances can lead to a three and a half percent decline in the share of poor people. There is also some evidence that remittances can help poverty in the longer term in the sense that (…) a disproportionate part of remittances appears to be invested in education and entrepreneurship and health."

The World Bank report says migrants would be able to send even more money home if the fees charged by remittance service providers weren't so high. Some fees reach as far as 15 percent for small transfers. The World Bank hopes that increased competition in the transfer market will encourage lower fees.

The World Bank also opposes efforts by governments to tax remittances and cautions them against trying to count remittances as development aid.

Sergio Marchi, a member of the Global Commission on International Migration, agrees. He says remittances from migrants should not replace overseas aid. Nor should they be taxed.

"Remittances represent the real hard work and sacrifice of migrants", Marchi says. "As well, it represents an economic hope for betterment in terms of being in the hands of the migrant's family back in developing countries. What it means therefore is that this belongs to the families of migrants and not to the countries."

Economic benefit and child labour

Duncan Campbell heads International Policy at the International Labor Organization of the UN. He provides one of the few dissident voices in this discussion about the economic benefits of migration. While acknowledging its value, he says ignoring the social and cultural aspects presents a distorted picture of migration.

"If I may make an outrageous statement, I can make, probably, a fairly sound economic argument on the benefits, at least in the short term, of child labour. Obviously, the report has nothing to do with that and I'm exaggerating. But, the point is that to leave things purely on economic benefit grounds, I think, opens up grounds for criticism."

While positively highlighting the economic gains accrued from migration, the World Bank says remittances should not be viewed as a substitute for economic development in low-income countries. Rather, they should be seen as complementing local development efforts. Ultimately, it argues, development depends on sound domestic economic policies.

Lisa Schlein

Qantara.de

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