Migration and development: the answer to poverty?
"Searching opportunities and a better life, migrants can speed up the developing process", says UN Secretary-General Ban Ki-moon.
International migration is a fact and, to a large extent, the result of the lack of sustainable development in home countries. In the age of globalisation and integration of markets, international migration can therefore be a potentially interesting response for both countries of origin as well as countries of destination. But, even if the economic benefits of migration might be positive, we have to look at the costs and see what the impact is, not only in terms of the economy but also with respect to the social well-being of the people involved.
Diaspora and development
"Diaspora is fast emerging as one of the forces for development in the globalizing world". Diaspora describes a group of nationals living abroad, whose members maintain their ethnic and national identity, keep in contact both with people in the country of origin and with other national diasporas around the world. They often create their own organisations, institutions and voluntary associations in the host countries to protect their rights; they fund community projects in countries of origin, such as schools, health centres, small-scale dams for farming, water supply system, agro-business programmes, etc. They facilitate and finance family reunification as well as migration of friends and they provide help for newly arrived migrants to find employment, housing, etc. Many work in skilled sectors and accumulate knowledge that allows them to establish and manage their own enterprises in their home countries. The creation of networks among migrants in sending and receiving countries promotes the flow of investments and know-how in the country of origin. For instance, Indian workers in the United States are supporting the Indian software industry through transfer of IT technology.
Remittances and their impact on poverty reduction
Migrants send home significant amounts of remittances. These international money transfers represent an important percentage of their income, although this varies by region and skill-level.
In 2008, migrants sent home some US$ 280 billion in the form of remittances; this is up 6.7 percent from US$ 265 in 2007. As informal remittances add another 50% to the total of formal remittances, the full amount is probably more than twice the official development aid (ODA) received by "developing" countries. Additionally, the circulation of skilled people can promote "brain gain" where a migrant’s destination country can take advantage of well educated people filling-in gaps in their own economy while the country of origin can see their skilled people come back to work, teach, invest, share skills and train other people.
Remittances have the potential to positively influence local development, reduce poverty and improve the lives of migrants and their families in particular. For this to happen, however, a suitable economic environment is necessary and the constraints people face need to be addressed properly. When this is not the case, remittances are used mostly for survival or emergency spending on food, water and fuel.
For more research on remittances see the Web Anthology on Migrant Remittances and Development.
The recurrent structural problems which people are confronted with include: high levels of corruption, lack of access to financial institutions (especially in the rural areas), the high cost of remitting, instability of exchange rates in the home country, illiteracy, and the requirements put in place in terms of proof of identity. The latter is especially the case for undocumented migrants who fear legal action or deportation if the authorities become aware of their status as a result of transmitting money. Additionally, the financial system makes the transfer of remittances costly for migrant workers: they pay for taxes when the money gets to its destination and for the commission levied by money transfer companies. High commissions can be collected by money transfer companies because of a lack of competition: for instance, Western Union and MoneyGram control 70% of the US remittances market and charge an average of 10% on financial transfers. However, fees can even be higher in other parts of the world, sometimes exceeding 20%. The global average for commissions on money transfers hovers at 13% . The fact that identification is often required means that many migrants (temporary migrants, who only migrate for a fixed period of time, and undocumented migrants) cannot open their own savings accounts nor access banking services.
The transfer of knowledge
Migration of lowly as well as highly skilled migrants can have a beneficial socio-economic impact on both countries of origin and destination. While abroad, migrants gain experience, know-how, earn money, create networks between the two countries and can contribute to the development of both.
If migrants go back home after a long period abroad (such as 5 to 10 years) their return can be beneficial in terms of development if (and only if) they find a favourable investment environment: they can create their own enterprises or invest in local enterprises, bring new knowledge in the fields of medicine or technology, develop educational projects and combat illiteracy through establishing schools, etc.
However, permanent return is rare since the root causes that led to emigration in the first place (often a complex combination of economic, social, political, and/or religious factors) are often still present. These push factors are a continuing reality, so migrants have very little incentives to return home. On the other hand, the loss of skilled people in countries of origin remains problematic since this "brain drain" represents a considerable loss to the sending countries.
For those who do return, reintegration in the local labour market is often difficult. This is particularly true for women who time and again find themselves back at home stuck in the roles of housewives and mothers and do not make the most of the skills they acquired abroad. Men find it difficult too as they adapt to a new work environment, which is different from the one they left behind. Where the gap in technology between the country of origin and the host country is large, the specific skills learned while overseas may be of limited relevance upon return.
Migrant workers who stayed abroad for less than six months usually do not have the possibility to acquire experience, knowledge or save enough money and therefore they bring very little back from their experience of migration. Finally, migrants who return for short periods (some months) tend to remain unemployed during that period, waiting to migrate again, without using or sharing their new skills.
Who should be responsible for development?
In a paper for the 2009 GFMD, Daniel Verger from Caritas France argues that development policies must be integrated into migration policies, trade policies and agriculture policies. He writes that:
“The international community would benefit from improving the integration of migration into development strategies. We must not forget that the key criteria for more coherence are the political impact on the improvement of the living conditions and the opportunities for people to make their own choice. A systematic and thorough impact assessment of external policies on developing countries, especially on the poor and vulnerable groups, including impact on forced migration is needed.
The influence of political choice is crucial, especially in the field of employment, trade and development policies. Those three aspects have to be put together to set up an effective policy which can give hope to people, and particularly young people.
As Daniel Verger writes in his contribution for the 2009 GFMD: “Development (turned to productive capacity increase), employment (particularly with regards to projects which are strongly labour-oriented and the development of high rate employment sectors), and trade (creating evolution and integration opportunities with regard to globalisation) together can become one coherent concept for just development.”