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Finding ways of making migration a genuine instrument for development in the countries of origin of migrants has recently drawn much attention among agencies dedicated to development and poverty alleviation. Remittances of migrant workers, in particular, arouse a lot of interest because they are viewed as a major source of external financing, one of the most stable over time, and one which reaches the very areas from which migrants come, i.e., those where funding development seems to be the most needed.
Remittances are part of a larger set of tangible and non-tangible migration-induced flows, departing from, or arriving to migrants’ countries of origin. Migration generates international transfers of capital, both financial and human, and it fosters the building of cross-border social capital. What is the balance between out- and in-going flows for migrants’ countries of origin? How do flows of finance and flows of skills interact with each other? Which role does social capital play in making the net outcome a positive or a negative one? What is the sustainability of migration-induced development? How do state policies in countries of origin of migrants, or the lack of specific policies, affect the net impact of transfers generated by migration?
Empirical evidence is still scanty on the diversity of transfers and their relation to development. In order to document the phenomenon in the Mediterranean area, CARIM will commission three case studies in three countries of the Middle East and North Africa , with an objective to produce results useful for policymaking. Each study, as well as the comparative perspective drawn from the three cases, should help identify factors of success or failure in the management of migration-induced transfers and their link with development.
Each case study should tackle, insofar as it is permitted by existing sources, the three following topics:
- Money transfers
- Human capital transfers
- Social capital building.
In most cases migration firstly costs, then brings benefits. Costs (i.e. expenses for moving to, and settling in, another country, for finding employment,…) include transfers from the country of origin to that of destination. Transfers operating in the opposite direction, notably remittances, come later.
Remittances are believed to be the most massive transfer generated by migration. Time series of their aggregated amount are available by recipient country (even though not always accurate: only transfers through banks and other formal financial channels are counted), but little is known on the following aspects of remittances:
- Evolution of amounts remitted across the life cycle of individual migrants: a reverse U shape is expected, remittances increasing in a first step during which savings are accumulated, then declining in a second step when migrants start to integrate in host countries, and finally vanishing a generation later.
- The use of remittances by recipient households, in particular their distribution between investment and consumption (of goods or services, including health care, education and other social services).
- The net impact of remittances on local labour markets, between job creation through increased demand for local goods and services, and job destruction through increased imports.
- The effect of remittances on poverty alleviation on one side, and the generation of new social inequalities on the other side.
- The link between remittances and migrants’ plans for return.
- The effect of changing demography on patterns of savings and remittances, in particular the impact of the exceptional ‘demographic gift’ currently benefiting young generations (they enjoy at the same time a low burden of children - their fertility is now low - and a low burden of elderly people - Thanks to the high fertility rates of the previous generation).
Human capital transfers
Most migrants are grown up individuals. The education they had received at the expense of their country of origin (at a cost varying with the level of education) is beneficial to the country where they are employed (provided that they are employed). Migration thus operates a transfer of human capital from countries of origin to countries of destination, i.e. from less to more developed countries.
Transfers operating in the opposite direction must also be taken into account. On the one side, financial transfers to countries of origin possibly offset the initial investment on education: this happens as soon as savings on income earned abroad and remitted home, are greater than the income that would have been earned at home (weighted by the probability of being employed in their country of origin). On the other side, the initial investment in human capital at home might be offset when additional skills are gained in countries of destination and benefit countries of origin, either directly in the case of return migration during the course of the working life, or indirectly through economic activities developed by migrants in their home countries.
One has finally to verify the ‘brain gain’ hypothesis. According to this hypothesis, emigration of highly qualified workers would foster the accumulation of human capital in their country of origin and eventually result in a higher concentration of skills than if no emigration had taken place, i.e. a net gain of human capital. The reason for this gain would be that the higher education is rewarded abroad, the higher it is valued at home: success stories of educated emigrants would create new incentives for gaining education. The condition for the brain drain to eventually bring about a net gain, would be that emigration remain under a certain threshold, beyond which it would produce a net loss.
Social capital building
Networks are key intermediates in migration, which operate in both directions. On the one side, former migrant communities established in countries of destination facilitate the arrival and settlement, and often the employment, of new immigrants who are related to them, by kinship or just neighbourhood, in the country of origin. In this case, migration builds on pre-existing social capital.
On the other side, there are various situations in which social capital is built on migration. This happens when immigrants become entrepreneurs in host countries, and build there a network of relations proper to their professional activity. If they extend part of their activity to their country of origin, this results in transferring to this country some benefits of a social capital accumulated abroad.
No data collection in the population will be carried out.
Instead, each case study will make use of a variety of available data sets, such as the following:
- Aggregated data provided by administrative sources
Data of administrative origin on flows (annual amount of remittances, of direct investment by expatriates, ...) and stocks (stock of skills: distribution of expatriates by level of education, …) are usually provided at the level of the whole country. They allow descriptive analyses of levels and trends, and formulating hypotheses on determining processes (time and space correlation analyses).
- Aggregated survey data
Apart from migration surveys, other surveys not specifically dedicated to the study of migration might contain useful data on migration-induced transfers: this is the case of household expenditures and consumption surveys in which origins of resources available to the household are recorded; of living standard surveys; of population censuses (and their sub-samples) in which relatives abroad are recorded as absent members of the household; of surveys of industries and service companies in which origins of capital are recorded; etc.
- Individual survey data
Individual data from the above surveys offer a more powerful tool than their aggregated data for analysing determining processes. Processing individual records allows to apply classical statistical methods (regression, …) for validating hypotheses adopted from aggregated data analysis. It also makes it possible to reconstruct categories in order to answer specific questions, such as: what would be the proportion of households below the line of poverty if there were no remittances? What is the impact of remittances on the income distribution? Is there a relation between remittances and the economic activity of non-migrants? …
Methods will be adapted to available data in each country. Comparability between the three case studies will thus be sought ex-post, not constructed ex-ante.
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CARIM is currently publishing papers following research into Highly-Skilled Migration into, through and from the Southern and Eastern Mediterranean and Sub-Saharan Africa. Click on the link to view the papers in the series.
CARIM Migration Profiles provide an overview of demographic, economic, legal and sociopolitical aspects shaping migration in the country.
Click here for more information
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Click on the link to view the papers in the series.
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