* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.
What does emigration mean for low- and middle-income states?
Migration is seemingly always in the headlines nowadays. Whether it’s as a key reason for Britain voting to leave the EU, small Canadian communities raising money to bring a displaced Syrian family to live with them, or even the Republican nomination for president standing by his policy of deporting all undocumented migrants in the US, stories—both positive and negative—are all over world news.
Certainly, the positives for recipient countries have been laid bare: cheap labour, the filling of skill gaps and the addition of new cultures that can enrich the fabric of society.
An often overlooked aspect of the story, however, is that of the country of origin. What does emigration mean for low- and middle-income states? The once prevailing idea that well-educated ‘brain drain’ from these countries is a severe problem has been questioned for a while, and now wider trends around migration are proving to have positive effects too.
Migration can boost growth and socioeconomic development in origin countries and, under the right circumstances, has the potential to become a win-win game for all parties involved. Using two countries with high rates of emigration as case studies, Vietnam and Tunisia, we have found that states with outward migration can benefit in two ways: from remittances—an immediate benefit, and returnees—a deferred benefit.
Remittances are a significantly greater source of revenue than official development assistance (ODA), with global remittance payments totalling $431 billion in 2015 (compared with $131 billion in ODA). The pace of remittance growth has also consistently outperformed other capital flows, such as foreign direct investment, and remittances tend to be more stable as well. They are therefore a truly vital source of revenue for low- and middle-income countries.
Due to this reliability, in many cases remittances essentially act as an extra source of regular income, much like an additional salary. This can help households withstand income drops—be they from economic or natural shocks—or invest in their future. One investment that evidence seems to show remittances can help households make is that into childhood education. My research in Vietnam seems to bear this out also.
Between 1990 and 2009, Vietnam’s economy expanded substantially, with much of this attributable to inflows of remittances from international migration. During this period, there was also a sharp drop in instances of child labour and an increase in school enrolment. Analysis shows that part of this reduction in child labour can be attributed to the extra income households had received as remittances. Children were therefore free to go to school more often, and for longer.
Return migration is another way countries of origin can benefit from the migratory process. It tends to play out over a longer period, but is nonetheless very important. Return migrants often have increased levels of financial and human capital to invest in their home country on returning, as a result of enhanced earnings potential whilst overseas, and the learning of new skills as part of deployments.
An example of how this can be successful for individuals and states is provided by Tunisia. Since the mid-1990s, an economically liberal environment has been cultivated by the Tunisian government, with a number of policies aimed at enticing back emigrants and attracting foreign direct investment. These measures, while independent of each other, have had a complementary effect.
First, the government introduced fiscal incentives for return migrants to invest back in their homeland, meaning some goods and services were cheaper to procure. A second set of measures gave foreign companies tax exemptions and administrative assistance when investing in Tunisia. The combined effects of these measures was impressive growth in domestic and foreign investment, and beyond this, a healthy number of Tunisians gained senior positions with these foreign companies (often after having previously worked for them overseas), or set up their own businesses and employed more of their fellow nationals. A positive picture for the country, individuals and companies involved.
Of course, there are issues to be dealt with concerning both remittance flows and returning migrants. A number of studies have shown that the reduced parental care children of international migrants receive can harm their development prospects. The Vietnam example, while positive overall, demonstrates this well. The rates of child labour in families with an internally migrant parent (i.e. they stayed in Vietnam) actually fell more quickly than those of the international migrant households, despite the remittances generally being of lower value.
This is possibly due to parent-child relationships being easier to maintain with relative proximity. Equally, my analysis indicates that returning migrants only fared better than their compatriots if their return was planned. Those who were forced to leave, for whatever reason, were just as likely to have their own business as those who had never emigrated from Tunisia.
Despite these issues, and in a world where migration is the new normal, policymakers should do more to promote the positive impacts it can bring. Similarly, additional in-depth study into how to combat issues that derive from it is required in order to minimise negative impacts. In the examples of Vietnam and Tunisia, simple policy instruments like extra childcare provision and returning migrant programmes could have done just that.
Other countries with high outward migration take note.
Michele Binci has a PhD in development economics and is a Monitoring and Evaluation Consultant at Oxford Policy Management. He has worked as a consultant economist for a number of international organisations, including UN FAO, the World Bank and UNICEF, focusing on the analysis of household welfare and child wellbeing, including poverty and food security, nutrition, schooling and child labour.
