Migration, Remittances, and Development: Policy Options Dilip Ratha Migration and Remittances Team...
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Transcript of Migration, Remittances, and Development: Policy Options Dilip Ratha Migration and Remittances Team...
Migration, Remittances, and Development: Policy Options
Dilip RathaMigration and Remittances TeamDevelopment Prospects GroupWorld Bank
Lowy Institute, SydneyJuly 16, 2008
Outline
A. Stylized facts
B. Development impact of international migration
C. Policy implications
A. Stylized facts
1. Only 3% of world population are international migrants; 97% are not.
2. Economic migrants account for 93% of global migant stock.
Income differences are a powerful motivation for migration
Median wage levels for workers in the same occupation, relative to high-income economies (1988-92, adjusted for purchasing power)
Source: Freeman and Oostendorp 2000
100
43
2821
0
25
50
75
100
High income
Upper middle income
Lower middle income
Low income
A. Stylized facts
1. Only 3% of world population are international migrants; 97% are not.
2. Economic migrants account for 93% of global migant stock. Economic migration is set to increase in future.
3. South-South migration is as high as as South-North migration.
South-South migration is almost as large as South-North migration
South47%
North (HI-non-OECD)
13%
North (HI-OECD)
40%
Source: Ratha and Shaw (2007)
Destination of migrants from the South
B. Development impact of international migration
1. Migration benefits all parties – the migrants, the destination country, and the origin country.
Migration boosts welfare for most households
139
-88
143 162
-90
-60
-30
0
30
60
90
120
150
180
Natives, high-income countries
Old migrants,high-inc.countries
Residents,developingcountries
New migrants
.
Global income gains of $356 billion (0.6%)
Change in real income in 2025, $ billion
Source: Global Economic Prospects 2006
B. Development impact of international migration
1. Migration benefits all parties – the migrants, the destination country, and the origin country.
2. Benefits to countries of origin are mostly through remittances.
-25
25
75
125
175
225
275
325
375$ billion
Private debt and portfolio equity
FDI
ODA
RecordedRemittances
Remittances are large, have continued to increase
27 26 25
17
13
0
10
20
30
Top recipients of remittances
36 3632
27 26
0
10
20
30
40
$ billion, 2007 % of GDP, 2006
Remittances reduce poverty
Evidence from a few household surveys shows that remittances reduce poverty
Remittances also finance education and health expenditures, and ease credit constraints on small businesses
Remittances have reduced poverty in Nepal
23
42
32 31
15
20
25
30
35
40
45
% of householdreceiving remittances
Poverty headcount rate%
1995/6
2003/4
Source: World Bank, DFID, ADB Study 2006, Glinskaya and others 2006
Remittances help reduce poverty in Sri Lanka
0 0 1
1620
83 5
-1
-7
-10
-5
0
5
10
15
20
25
1 2 3 4 5 6 7 8 9 10
% of Sri Lankan households that moved up to a higher income decile after receiving remittances, 1999-2000*
Income Decile
Remittances tend to rise following crisis, natural disaster, or conflict
Remittances as % of private consumption
0.5
1.7
1.21.4
2.0 2.0
1.0
1.8
2.0
Indonesia Thailand Mexico
year before
year of crisis
year after
Downside of remittances
Large remittance flows may lead to currency appreciation and adverse effects on exports; but sterilization of inflows may not be an appropriate policy response
Remittances may create dependency
Remittance channels may be misused for money laundering and financing of terror
Migration and remittances in the Pacific
1. Remittances to Pacific Island countries were about $500 million in 2006
Tonga $91 mn or 39% of GDPSamoa $67 mn or 14% of GDPFiji $165 mn or 6% of GDP
2. Outward remittances from Australia $2.8 bn or 0.4% of GDP, New Zealand 0.9 bn or 0.8% of GDP in 2006
B. Development impact of international migration
1. Migration benefits all parties – the migrants, the destination country, and the origin country.
2. Benefits to countries of origin are mostly through remittances.
3. Emigration of skilled people may be a problem in small countries
4. Diasporas also provide business contact, trade network, technology, and capital to the origin country.
1
3
5
7
9
11
13
15 Percent
US Treasury 10-year
Israel DCI bond
Discount on Israel diaspora bonds
Israel and India have raised nearly $40 billion via diaspora bonds
Outline
A. Some stylized facts
B. Development impact of international migration
C. Policy implications
C. Policy implications
1. The international remittances agenda
International remittances Agenda
1. Improve monitoring, analysis, projection (MAPping)
2. Improve retail payment systems:
reduce remittance costs
High remittance fees are a drain migrant income
2
6
10
14
18
22
26
30
1999 2000 2001 2002 2003 2004 2005 2006 2007
0
5
10
15
20
25
30Fee for sending $300 from U.S. to Mexico, left-scale
Remittance flows to Mexico, $ bn, right scale
Source: Condusef, Mexico
$10
$12
$27
$29
$35
$13
$23
$24
London-Lagos
Cotonou-Lagos
Singapore-Jakarta
Kuala Lumpur-Jakarta
Jakarta-Kuala Lumpur
Los Angeles-Mexico City
Guatemala City-Mexico City
Mexico City-Guatemala City
South-South
North-South
Fee and FX commission $
South-South remittance costs tend to be higher than North-South costs
Cost of remittances to Pacific Islands often exceed 20%
International remittances Agenda
1. Improve monitoring, analysis, projection (MAPping)
2. Improve retail payment systems:
Reduce remittance costs
Improve competition in remittance industry
Share networks - avoid exclusivity contracts
Avoid overregulation of remittance industry
Introduce new technology
3. Leverage remittances for financial access for households
4. Leverage remittances for improving access to capital markets for institutions/countries
International Remittances
Agenda
1. Monitoring, analysis, projection
2. Retail payment systems
3. Financial access for households
4. Capital market access for institutions
International Remittances
Agenda
1. Monitoring, analysis, projection- Size, corridors, channels- Counter-cyclicality - Effects on poverty, education, health,
investmen- Policy (costs, competition, exchange
controls)
2. Retail payment systems- Payment platforms/instruments- Regulation (clearing and settlement, capital
adequacy, exchange controls, disclosure, cross-border arbitration)
- Anti-money laundering/Countering financing of terrorism (AML/CFT)
3. Financial access for households
- Deposit and saving products- Loan products (mortgages,
consumer loans, microfinance)
- Credit history for MFI clients- Insurance products
4. Capital market access- Private banks and
corporations (securitization)
- Governments (diaspora bonds)
- Sovereign credit rating
G8 Global Remittances Working Group
C. Policy implications
1. The international remittances agenda
2. Know your migrants/diaspora
3. Help potential migrants acquire globally marketable skills
4. Ethical recruitment policies may be ineffective, and unethical –
5. Improve transparency in recruitment of migrants
6. Border control policies should be revisited
Migration
Maximum0Border control
Migration Curve
Migration
Maximum0Border control
C
Migration Curve
Migration
Maximum0Border control
C Income difference
C. Policy implications
1. The international remittances agenda
2. Know your migrants/diaspora
3. Help potential migrants acquire globally marketable skills
4. Ethical recruitment policies may be ineffective, and unethical –
5. Improve transparency in recruitment of migrants
6. Border control policies should be revisited
7. Migration is not a substitute for employment creation at home
Development implications of migration and remittances
Migration and remittances continue to increase. South-South migration may be as large as South-North migration
Migration generates substantial welfare gains and reduces poverty. Benefits to countries of origin are mostly through remittances, and also through trade, investments, and transfer of knowledge, skill and technology
Migration and remittances can be leveraged for the development of poor countries, but they are not a substitute for development at home
World Bank work program
• Research and publications
• Global advocacy
• Country analytic work/Operations
• Africa migration project
• Pacific Islands labor mobility program
www.worldbank.org/prospects/migrationandremittances
References:
At Home and Away: Expanding Job Opportunities for Pacific Islanders through Labour Mobility
Migration and Remittances Factbook 2008
International Remittances
Agenda
1. Monitoring, analysis, projection- Size, corridors, channels- Counter-cyclicality - Effects on poverty, education, health,
investmen- Policy (costs, competition, exchange
controls)
2. Retail payment systems- Payment platforms/instruments- Regulation (clearing and settlement, capital
adequacy, exchange controls, disclosure, cross-border arbitration)
- Anti-money laundering/Countering financing of terrorism (AML/CFT)
3. Financial access for households
- Deposit and saving products- Loan products (mortgages,
consumer loans, microfinance)
- Credit history for MFI clients- Insurance products
4. Capital market access- Private banks and
corporations (securitization)
- Governments (diaspora bonds)
- Sovereign credit rating