Post on 12-Jun-2015
Diaspora & Economy: Effects of the Economic Slowdown on Remittances
Muhammad SohaibBBRM-10
Sustainable Development Policy Institute
1
Outline
• Introduction• Global Economic Slowdown• Patterns and Trends in Migration• Contributions of Diaspora• Remittances Flow to Developing Countries• Remittances to Pakistan• Some Case Studies• GoP Initiatives• Future Outlook• Overseas Pakistanis: Manifestos of Political Parties 2013
Introduction
• Diaspora• Pakistani Diaspora• Types of DiasporaLabor DiasporaBrain DrainImmigrants• Destinations of Migrants
Global Economic Slowdown• Global Financial Crisis 2007• Global Economy Contracted in 2008-2009• Downturn directly hit the advanced economies• In 2009 GDP per capita turned down in 60 out of 107
developing economies (UN 2010)
Source: UN Global Economic Outlook 2012
Patterns and Trends in Migration
There are few jumps and down falls, but there is a big climb started in 2005Data Source: BEOE
19721974
19761978
19801982
19841986
19881990
19921994
19961998
20002002
20042006
20082010
20120
50000
100000
150000
200000
250000
300000
350000
400000
450000
500000
Total Migrants
Type Wise Migrants2000 - 2012
Decline in unskilled migrantsData Source: BEOE
20002001
20022003
20042005
20062007
20082009
20102011
20120
50000
100000
150000
200000
250000
Highly Qualified Highly Skilled Skilled Semi Skilled Un-Skilled
Pakistani Workers Registered for Overseas Employment 2002-2012
Migrant flow to: UAE drops in 2008, Saudi Arabia 2009 and diminishes in Oman in 2009Data Source: BEOE
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
50000
100000
150000
200000
250000
300000
Saudi Arabia
UAE
Oman
Pakistani Workers Registered for Overseas Employment 2002-2012
Decline observed in the case of Khyber Pakhtunkhwa and Punjab
20002001
20022003
20042005
20062007
20082009
20102011
20120
50000
100000
150000
200000
250000
300000
PunjabSindhK.PakhtunkhwaBalochistanAzad KashmirN.AreaTribal Area
Contributions of Diasporas
Diasporas contributed in three facets• Remittances• Brain Drain (Brain Drain is a talent mobility; which can bring benefits to both host and home countries) - South Asian Brain Dain - Silicon valley of India (Bangalore)
• Role as Intermediaries -Diasporas can connect home countries to foreign investors - Cultural interpreters
Remittances to Developing Countries
Remittances have shown resilience than FDI since the global financial crisisDeveloping countries received $ 401 billion remittances in 2012(World Bank)In history it can be observe that remittance remained stable (Mexican financial crisis 1995, Asian Market Crisis 1997)
Remittances to Developing Countries
The remittance flows to developing countries in 2006 were 235 $billion and it increased in 2007 with a growth rate of 22.9 percent to 289 $billion, and increased to 338 $billion in 2008 with a
growth rate of 16.9 percent
Top 10 Recipients of Remittances in 2012
India China Philipines Mexico Nigeria Egypt Banladesh Pakistan Vietnam Lebnan0
10
20
30
40
50
60
70
80
69
60
24 2321 21
14 14
107
$ US
Bill
ion
Three South Asian countries are in top 10 recipientsSource: World Bank, Migration and Remittance Brief 20
Workers’ Remittances to Pakistan2002-2011
Was there no impact of Global Financial Crisis on Remittances?Data Source: State Bank of Pakistan
2002 2003 2004 2005 2006 2007 2008 2009 2010 20110
2,000
4,000
6,000
8,000
10,000
12,000
US
$ M
illio
n
Some Case Studies
Barajas et al (2010) investigated the effect of economic slow down on worker’s remittances of Africa(Many countries were forecast to lose 0.1 to 0.2 percent GDP growth due to fall in remittances in 2009)
Ratha. D and Mahapatra. S argued that the global financial crisis has caused decline in remittance flows to low income economiesBalan et al (2011) evaluated the remittances and migration flows during the financial crisis in the European Countries
Some Case Studies
Raihan .S (2010) examined the impact of global financial crisis on remittances, exports and poverty in Bangladesh.(He analyzed the negative shock in remittance will result decline in real GDP by 0.1 percent)
Raihan. S (2010) explored the impact of global financial crisis on migration and remittances in Bangladesh. (The macro statistics showed positive growth in remittances during the crisis but there were large number of household who faced fall in remittance inflows by migrants)
Some Case Studies
Ahmed et al. (2010) examined the impact of remittances on economy and household welfare (If remittances inflows reduced to 50 percent, the GDP growth declined to 0.7% as a result and investment and imports also decreased to 7.7 percent and 6.4 percent respectively)
Ahmed and Sugiyarto (2012) find that improvement of household consumption and investment are positively and consumer prices are negatively associated with remittances
GoP Initiatives
• BOEO is working under the emigration ordinance of 1979
• Overseas Employment Corporation (OEC) • Overseas Pakistanis Foundation (OPF) • Foreign Remittance Card Scheme• Pakistan Remittance Initiative
Workers’ Remittances from Abroad2002-2011
• Remittances not affected during and after the crisis– Traditional migrant economies in Middle East remained
insulated (except UAE)– Indian Diaspora in Middle East was a lesser competition
given the appreciation of Indian currency– The weakening of Pakistani currency implied that
Diaspora’s consumer surplus increased when purchase was made locally
Future Outlook
• Demand Side Factors The flow of remittances will continue to increase in the
foreseeable future Pakistani migrants have embarked upon non-traditional
workplace destinations as well East is a good Option The banking sector in Pakistan is now viewing the remittances
as a major source of business
Future Outlook
• Supply Side Factors EU will remain in recession North America will continue to Maintain its strict visa policies China and East Asia will be future engines for Economic
Growth Middle East will continue to diversify away from South Asian
Migrants
Recommendations
• Diaspora may be engaged beyond their monetary contributions : in terms of knowledge and technology
• Migration Policy needs to be aligned with the Development Policy
• Banking Sector can play a vital role• Role of Overseas Pakistanis Division needs to be revisited
Overseas Pakistanis: Political Parties Manifestos 2013
• Pakistan Muslim League – N• Pakistan Tehreek-i-Insaf• Pakistan Peoples Party• Pakistan Muslim League - Q• Muttahida Qauami Movement