1 Enhancing the Development Impact of Migration: Issues and Policy Options Mr. Luca Barbone World Bank February 5, 2009

2 Observations on the development impact of migration... How and in what ways is migration important for development? What are the costs and benefits of migration for developing and developed countries? What are the strategic choices that countries— both receiving and sending—are facing

3 Four reasons why migration is controversial Migration is not happening uniformly: large numbers of migrants leave from relatively few countries and move to selected destinations For several developing countries, out-migration involves a large fraction of the population. An even larger fraction of migration occurs between developing countries themselves, known as South-South migration Some of the largest movements of labor in the world occurs within countries

4 Percentage migrants in population – U.S. and Europe attract a large portion of migrants...

5...while migrant remittances represent a large portion of GDP in several ECA countries

6 Out-migration represents a significant portion of the population of many countries...

7 …while the flow of workers into other countries is significant

8 Migration will likely continue to increase, because: Increasing globalization  greater awareness of gaps in living conditions  clearer incentives for migration; Improved access to transportation and communications  facilitates mobility of individuals Enhanced information flows  reduce uncertainty over migration prospects; With a large share of population under 30, developing country workers are more responsive to migration incentives; Consolidation of diasporas in higher income countries  facilitates information and social networks required to migrate.

9 Migration benefits for sending countries Economic growth through increased foreign exchange Income gains to migrants and reduction in household poverty Investment in human capital Gives possibility to investment in business start-ups if managed properly

10 Migration benefits for receiving countries Improved economic efficiency and growth Increased labor supply (as populations in developing countries decline) Job-creation through migrant entrepreurship Slow down in overall wage growth and inflation

11 Working-age populations in developed countries decline...

12 Key costs related to migration Macroeconomic costs: potential for Dutch disease Relocation and other costs to individuals Social exclusion and effects on the family Deterioration of key social services

13 Possible migration strategies Focus on the role of the sending country as an exporter of people, by: Specializing in the exporting labor and remiaing competitive in the market for migrant work Financing its external accounts through remittances Training workers to match demand from abroad - OR - Focus on making the sending country more attractive to its citizens, by Implementing policy and institutional reforms to make the economy more competititve. Improving the domestic business environment Strengthening basic and higher skills training

14 Migration issues and the current global financial crisis How is the situation different than in previous economic downturns –Given global nature of the problem present crises limits potential for alternatives –Migrants already returning to home countries where job opportunites have shrunk further –Remittances expected to decline Possible policy responses –In the short term, focus on social protection –In the medium term, agree on innovative measures to better target worker flows and skills enhancement as host countries demand Linkages between stimulus packages and migration –Stimulate consumer spending –Job creation –Infrastructure rebuilding –Unfreezing access to credit

15 Conclusions Close information gaps and increase understanding of the effects of migration Refine agreements between hosting and sending countries to ensure the fair treatment of migrants Institute innovative policies that better target the needs of migrants and host countries.