Leveraging migration and remittances for development.

Author:Ratha, Dilip

Three notable facts about migration are often drowned in the stringent debate surrounding migration policies. First, the contribution of migrants to their host and home countries is enormous, over $500 billion in remittances alone (of which over $400 billion went to developing countries in 2012). Second, South-South migration is actually larger than South-North migration, implying that not only emigration, but also immigration matters for the developing countries. Third, internal migration is nearly four times the size of international migration and is an integral part of an economy's structural change and development process. Yet, movement of people is rarely included in the development strategies of countries.

Migration to a richer destination can provide a fast path to reducing poverty not only of the migrant but also of the family members left behind. After migration, a person's income multiplies rapidly, often by a factor of 10, and the income gains are shared with family members and friends back home through remittances. These remittances are used for purchasing food, housing and health care for the family, education for children, and business investments. Over time, migrants facilitate exports and imports between countries. The more skilled ones also share their knowledge and expertise with people back home. Some of them return home after years of working abroad, bringing with them skills and savings. In the destination community, migrants provide cheap labour and scarce skills for their employers and, over time, many of them invest in real estate, businesses and new enterprises that create employment.

Remittances, the money migrants send home to family and friends, provide the most tangible and perhaps the least controversial link between migration and development. In 2012, international remittance flows to developing countries, as officially recorded, amounted to nearly four times the size of official development assistance (figure 1). (The true size of remittances, including unrecorded flows, is larger, perhaps a multiple of the current level in many poor countries.) In addition, remittances tend to be stable and resilient during financial crises. Unlike private capital flows which fell precipitously during the global financial crisis in 2009, remittances to developing countries declined by less than 5 per cent and recovered quickly afterwards. In times of an economic downturn or a natural disaster or political crisis back home, migrants send a bit more to help their families. Thus, remittances often act as insurance against unexpected adverse events.



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