PRB Discuss Online: Remittances, and the Recession's Effects on International Migration
May 26, 2011
(May 2011) About 3 percent of the world’s people are international migrants, living outside their country of birth for a year or more. Two-thirds of these migrants leave developing countries for developed or other developing countries, and the remittances they send home—around $325 billion in 2010—are larger than total official development aid.
The 2008-2009 recession slowed migrant entries into developed countries but did not lead to large-scale returns. International migration is increasing, making the management of migration an ever greater concern. Martin’s latest PRB web article, “Remittances, and the Recession’s Effects on International Migration,” is an update of his 2008 Population Bulletin, “Managing Migration: The Global Challenge.” In a PRB Discuss Online, Philip Martin, professor of agricultural and resource economics at the University of California, Davis, answered questions from participants about remittances; and the recession’s effects on international migration.
May 26, 2011 1 PM (EDT)
Transcript of Questions and Answers
Seth Frimpong: How can skills and employment be created to reduce international migration in Africa?
Philip Martin: This is hard to answer. Many African countries spend relatively more on higher education than on K-12 schooling, which leads to “too many” university graduates who cannot find jobs, prompting them to emigrate. This brain drain can slow development at home, but the losses may be somewhat offset by remittances from professionals abroad who send back remittances.
Ehsan: What are the effects of the recession on the educated and uneducated migrants? I have seen many uneducated Pakistani migrants returning back from UAE due to unemployment.
Philip Martin: The overall story is that international labor migration did NOT fall sharply in 2008-09. Only a few countries followed the example of Malaysia, where the government told employers to lay off foreign workers to open jobs for Malaysians, and soon rescinded this order. However, some construction projects in the UAE were halted and workers sent home in the middle of 3-year contracts, just as migrant workers were displaced in North Africa. However, from a global perspective, the main pattern is fewer new deployments rather than large-scale returns.
Trilochan Pokharel: There were debates during the period of recession as some developed countries like UK relaxed immigration policy for allowing large number of education migrants. It was considered as their strategy to cope with recession by collecting education revenue. Some other countries also relaxed immigration policy for attracting skilled labour force from developing world. Do you think that those strategies worked to shape international migration? Recently, many developing countries are much worried about potentially declining remittance and reduction in foreign employment because of political instability in the middle-east than the 2008 recession. What could be the implication of these instances in global international migration?
Philip Martin: Australia, the UK, and the US have a number of private and public language schools and universities that depend on tuition from foreign students. Rapid economic growth in China, India, and elsewhere makes foreign study more affordable, increasing enrollments. There have been recent changes to laws and regulations in Australia and the UK that will make it harder for some foreign students to enter for study, but other changes can make it easier for graduates of local universities to stay and work, esp. in Canada and the US.
Demonstrations led to the downfall of entrenched leaders in Tunisia and Egypt in winter 2011; NATO provided assistance to rebels in Libya. There were two major migration outcomes. First, there were large-scale repatriations of Asian and African migrants, and second, over 25,000 Tunisians traveled by boat to the Italian island of Lampedusa, which has fewer than 5,000 permanent residents. The Italian government asked the EU for help to care for the migrants and sent advisors to Tunisia to help Tunisian police to block the departure of boats with migrants headed for Italy. The EU refused to implement a burden-sharing agreement, prompting the Italian government on April 5, 2011 to issue Tunisians in Italy temporary papers that allowed them to travel to France, where many had relatives, prompting France to stop trains from Italy at its border.
Second, many of the estimated 1.5 million African and Asian migrants in Libya were displaced by fighting, and 665,000 migrants left Libya for Egypt or Tunisia by the end of April 2011. Some countries quickly arranged to transport their citizens home, including China and Turkey, while the nationals of other countries were left to fend for themselves, including Bangladeshis and Nepalese and many Africans. Donors provided funds to IOM and other international organizations to fly home migrants from Asian countries who crossed the Libyan-Tunisia border. Many Africans were left to fend for themselves.
Alex Kojo Boahoma: How beneficial or detrimental is brain-drain (migration of principally unemployed and underemployed graduates) to the development of African Countries?
Philip Martin: Remittances to developing countries were $325 billion in 2010, and are expected to be higher in 2011 (www.worldbank.org/prospects/migrationandremittances). Remittances are almost three times Official Development Assistance but less than Foreign Direct Investment to developing countries, which was about $400 billion in 2010.
About half of the 73 million migrants from developing countries who were in industrial countries in 2010 were in their almost 600-million strong labor force, that is, about six percent of workers in industrial countries were migrants. Most migrants in industrial are low-skilled, as with Mexicans in the US, but many are highly skilled, such as Indian IT workers in the US and Europe. Migrants in industrial countries likely contribute about the same share to industrial country GDP as their share of the work force, 6 percent.
J Kishore: Dear Sir, How many dollars international migrants earned in developed countries and how much they are sending to their birth countries? Can we say most of the productivity of developed nation is because of these migrant professional laborers.
Philip Martin: Remittances to developing countries were $325 billion in 2010, and are expected to be higher in 2011 (www.worldbank.org/prospects/migrationandremittances). Please refer to my response to Alex.
Donghui Yu: Do you have updated number of Chinese American remittances to China? What’s the characteristics of Chinese remittances?
Philip Martin: China and India are the largest recipients of remittances—see www.worldbank.org/prospects/migrationandremittances.
A.RANJITHKUMAR: migration is a national and international problem, what is major reason for it?
Philip Martin: People move for many reasons. See www.prb.org/Publications/PopulationBulletins/2008/managingmigration.aspx.
A.RANJITHKUMAR: respected sir, do you agree that international migrations affect national development? how it can be give solution as your opinion
Philip Martin: See more at http://migration.ucdavis.edu/mn/. The number of international migrants, defined as people outside their country of birth or citizenship for a year or more, regardless of purpose or legal status, almost doubled between 1980 and 2005 to 191 million.
Half of the world’s migrants are workers in destination countries. The incentive for especially young people to cross national borders for economic opportunity is rising because of increased demographic and economic inequalities. Meanwhile, revolutions in communications and transportation make it easier to cross national borders, and the rights revolution of the past half century has enabled some migrants to stay abroad. With inequalities hard to reduce, and strong economic forces encouraging more communications and transportation links, governments have tried to manage migration by adjusting the rights of individuals.
Managing Labor Migration in the Twenty-First Century is a three-part, seven-chapter book that explores the major labor migration flows around the world and how countries are managing them. Particular attention is focused on the extremes of the job ladder, the migration of professionals such as IT specialists as well as unskilled farm workers. All of the programs examined are controversial, suggesting that there is no magic formula for moving workers across borders.
About 40 percent of the world’s migrants move from one developing country to another, and Chapter 6 explores labor migration issues in Thailand, one of the East Asian tiger economies. In less than a decade, the employment of migrants from poorer neighboring countries spread from border areas to the booming Bangkok area, with employers asserting that, without migrants, they would go out of business. Efforts to substitute Thais for migrants after the 1997-98 financial crisis largely failed, and the Thai government continues to periodically re-register migrants that it expects to eventually return.
In an ideal world, there would be few barriers to migration and very little unwanted migration, as within the US or the EU. Achieving fewer and lower migration barriers will require economic development in migrant-sending areas, and the final chapter explores the effects of the 3 R’s of migration; recruitment, remittances, and returns, on economic development. Migration can set in motion virtuous circles, as when sending Indian IT workers abroad leads to new industries and jobs in India, or set in motion vicious circles, as when the exit of professionals from Africa leads to less health care and too few managers to operate factories.
Martin, Philip, Manolo Abella and Christiane Kuptsch. 2006. Managing Labor Migration in the Twenty-First Century. Yale University Press. http://yalepress.yale.edu/yupbooks/book.asp?isbn=0300109040.
Erin Hofmann: Your article mentioned that the recession has affected migrants working in construction and manufacturing more than those working in healthcare and services. Since healthcare and service workers are often women, has the global recession led to an increased share of women among international migrants?
Philip Martin: Probably yes, but we do not have current data on migrant workers by sex—about half of all migrants are women: www.unmigration.org
Robert Winfield: What countries do you see migrant labour targeting next (e.g. Poland has the potential to become a remittance send market), or do you believe as the recession improves the traditional migrant destinations will continue to be the main destinations? Also do you see technology (e.g. mobile) having a significant impact on the distribution of remittances to developing countries?
Philip Martin: Some migrant-sending countries, such as the Philippines and Sri Lanka, have govt agencies that “market” their workers abroad. Until recently, Libya was a major “new” market. Migrant-sending countries are looking for new destinations including fast-growing countries in Eastern Europe such as Poland as well as Australia and Canada, which are benefitting from the commodities boom.
The single largest remitter is Western Union, with 445,000 locations where people can send money to others. Western Union says there are 16,000 “migration corridors” world wide, meaning significant flows of money from one country to another. Sending money over national borders is growing rapidly because it is cheap and less regulated than banks. In some countries such as Africa, the transfer involves minutes of air time rather than cash.
Seth Frimpong: What is the Significance of migration to Africa’s youth and their descendants?
Philip Martin: Many Africans would like to migrate, and a combination of the world’s fastest population growth—Africa’s population is projected to double to 2 billion in the next 40 years—and lower incomes at a time of globalization is likely to encourage especially African youth to seek to emigrate. It is relatively hard for Africans to migrate long distances; most African immigrants in the US are well educated. However, Europe fears boatloads of migrants leaving from North Africa or from Senegal to Spain’s Canary Islands. The question is whether economic development in Africa will be fast enough to discourage such migration.
Erin Hofmann: At the global level, remittances fell in 2008-09, then recovered in 2009-10. Did remittances fall less, or recover more quickly from some source countries than others? (I’m thinking mostly about the levels of remittances sent from major migrant destination areas like the US, Europe, Russia, Gulf states.)
Philip Martin: See http://migration.ucdavis.edu/mn/more.php?id=3666_0_5_0.
The World Bank estimated that migrants sent $325 billion to developing countries in 2010, up from $307 billion in 2009. India received $55 billion in remittances in 2010; China $51 billion; Mexico $23 billion; and the Philippines, $21 billion; Bangladesh was the fifth largest developing country recipient with $11 billion. The World Bank projects rising remittances to developing countries, $346 billion in 2011 and $374 billion in 2012. Remittances did not fall as much as expected in 2008-09 because net migration from developing to industrial countries remained positive. Most migrants in industrial countries remained there. Further, migrants abroad reduced their living costs in order to maintain remittance payments. Migrants employed in Gulf countries such as Saudi Arabia continued to remit despite the recession.
Sub-Saharan African countries, among those least affected by the 2008-09 global recession, received an estimated $22 billion in remittances in 2010. Data for individual African countries are not fully reliable, and there are often major discrepancies between IMF remittance estimates and central bank reports. For example, the IMF estimated $125 million in remittances to Ghana in 2008, while the Ghana central bank estimated $1.6 billion.
Mobile telephones and the internet are reducing the cost of sending small sums over national borders. The World Bank estimated that the cost of sending $200 internationally fell from $19.60 in 2008 to $17.40 in 2010. The US-Mexican remittance corridor is one of the cheapest, while sending small sums over national borders is much more expensive in Sub-Saharan Africa and between New Zealand and Pacific Islands.
Many poor Africans make remittance transfers within countries by transferring minutes of calling time to the recipient. Some mobile phone operators are trying to develop minute-transfer programs that can be used by migrants in one country to send calling time to recipients in other countries.