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Migration, Remittances, and Development: Policy Options Dilip Ratha Migration and Remittances Team Development Prospects Group World Bank Lowy Institute, Sydney July 16, 2008. Outline. Stylized facts Development impact of international migration Policy implications. A. Stylized facts.

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  1. Migration, Remittances, and Development: Policy OptionsDilip RathaMigration and Remittances TeamDevelopment Prospects GroupWorld BankLowy Institute, SydneyJuly 16, 2008

  2. Outline • Stylized facts • Development impact of international migration • Policy implications

  3. A. Stylized facts • Only 3% of world population are international migrants; 97% are not. • Economic migrants account for 93% of global migant stock.

  4. Income differences are a powerful motivation for migrationMedian wage levels for workers in the same occupation, relative to high-income economies (1988-92, adjusted for purchasing power) Source: Freeman and Oostendorp 2000

  5. A. Stylized facts • Only 3% of world population are international migrants; 97% are not. • Economic migrants account for 93% of global migant stock. Economic migration is set to increase in future. • South-South migration is as high as as South-North migration.

  6. South-South migration is almost as large as South-North migration Destination of migrants from the South Source: Ratha and Shaw (2007)

  7. B. Development impact of international migration • Migration benefits all parties – the migrants, the destination country, and the origin country.

  8. Migration boosts welfare for most households Global income gains of $356 billion (0.6%) Change in real income in 2025, $ billion . Source: Global Economic Prospects 2006

  9. B. Development impact of international migration • Migration benefits all parties – the migrants, the destination country, and the origin country. • Benefits to countries of origin are mostly through remittances.

  10. Remittances are large, have continued to increase Private debt and portfolio equity FDI Recorded Remittances ODA

  11. Top recipients of remittances $ billion, 2007 % of GDP, 2006

  12. 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

  13. Remittances have reduced poverty in Nepal Source: World Bank, DFID, ADB Study 2006, Glinskaya and others 2006

  14. Remittances help reduce poverty in Sri Lanka % of Sri Lankan households that moved up to a higher income decile after receiving remittances, 1999-2000* Income Decile

  15. Remittances tend to rise following crisis, natural disaster, or conflictRemittances as % of private consumption

  16. 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

  17. Migration and remittances in the Pacific • Remittances to Pacific Island countries were about $500 million in 2006 Tonga $91 mn or 39% of GDP Samoa $67 mn or 14% of GDP Fiji $165 mn or 6% of GDP • Outward remittances from Australia $2.8 bn or 0.4% of GDP, New Zealand 0.9 bn or 0.8% of GDP in 2006

  18. B. Development impact of international migration • Migration benefits all parties – the migrants, the destination country, and the origin country. • Benefits to countries of origin are mostly through remittances. • Emigration of skilled people may be a problem in small countries • Diasporas also provide business contact, trade network, technology, and capital to the origin country.

  19. Discount on Israel diaspora bonds US Treasury 10-year Israel DCI bond Israel and India have raised nearly $40 billion via diaspora bonds

  20. Outline • Some stylized facts • Development impact of international migration • Policy implications

  21. C. Policy implications • The international remittances agenda

  22. International remittances Agenda • Improve monitoring, analysis, projection (MAPping) • Improve retail payment systems: • reduce remittance costs

  23. High remittance fees are a drain migrant income Source: Condusef, Mexico

  24. South-South remittance costs tend to be higher than North-South costs

  25. Cost of remittances to Pacific Islands often exceed 20%

  26. International remittances Agenda • Improve monitoring, analysis, projection (MAPping) • 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 • Leverage remittances for financial access for households • Leverage remittances for improving access to capital markets for institutions/countries

  27. G8 Global Remittances Working Group

  28. C. Policy implications • The international remittances agenda • Know your migrants/diaspora • Help potential migrants acquire globally marketable skills • Ethical recruitment policies may be ineffective, and unethical – • Improve transparency in recruitment of migrants • Border control policies should be revisited

  29. Migration Curve

  30. Migration Curve Income difference

  31. C. Policy implications • The international remittances agenda • Know your migrants/diaspora • Help potential migrants acquire globally marketable skills • Ethical recruitment policies may be ineffective, and unethical – • Improve transparency in recruitment of migrants • Border control policies should be revisited • Migration is not a substitute for employment creation at home

  32. 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

  33. World Bank work program • Research and publications • Global advocacy • Country analytic work/Operations • Africa migration project • Pacific Islands labor mobility program

  34. References:At Home and Away: Expanding Job Opportunities for Pacific Islanders through Labour MobilityMigration and Remittances Factbook 2008 www.worldbank.org/prospects/migrationandremittances

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