Emigration Brain Drain?

Zenit reports:

"Money Sent Home: A Boost for Many Nations
Study Highlights Role of Migration in Helping Development

WASHINGTON, D.C., NOV. 26, 2005 - International migration can be an important tool in helping developing countries, affirmed a World Bank report published Nov. 16. Migrants and the money they send back home, remittances, is the main theme in the annual "Global Economic Prospects report for 2006."

"The challenge facing policy-makers is to fully achieve the potential economic benefits of migration, while managing the associated social and political implications," commented François Bourguignon, World Bank chief economist.

Officially recorded remittances worldwide exceeded $232 billion in 2005. Of this, developing countries received $167 billion, more than twice the level of development aid from all sources. The report estimates that remittances sent through informal channels could add at least 50% to the official tally, making them the largest source of external capital in many developing countries. The report considered that it is plausible that in the coming years, official remittance flows will continue to rise at the 7% to 8% annual rate seen during the 1990s.

The countries receiving the most in recorded remittances are India ($21.7 billion), China ($21.3 billion), Mexico ($18.1 billion), France ($12.7 billion) and the Philippines ($11.6 billion). Those for which remittances account for the largest proportion of gross domestic product are Tonga (31%), Moldova (27.1%), Lesotho (25.8%), Haiti (24.8%) and Bosnia and Herzegovina (22.5%).

Remittances were larger than public and private capital inflows in 36 developing countries in 2004. In another 28 countries, they were larger than the earnings from the most important commodity export. In Mexico, for example, remittances are larger than foreign direct investment, and in Sri Lanka they are larger than tea exports.

The United States was the largest source country, with nearly $39 billion in outward remittances in 2004. ...

Costs and benefits

The World Bank explained that over the past two decades barriers to cross-border trade and financial transactions have fallen significantly, facilitating the transfer of money. At the same time, despite its economic benefits, migration remains controversial. While it brings benefits for some there can be important losses for other individuals and groups. Some workers may see an erosion of wages or employment, for example, due to the increased numbers of immigrants.

Migrants, too, pay a price, even if they reap economic advantages. Many immigrants, the report explained, particularly the irregular ones, suffer from exploitation and abuse. Then there are costs involved, especially those related to the exorbitant fees paid to traffickers. The family members left behind, particularly children, also suffer, while at the same time they benefit from the extra income that migrants send back home to their families. ...

The World Bank did warn, however, that in the long run the policies of developing countries should aim to generate adequate employment and rapid growth, rather than relying on migration as an alternative to development opportunities.

Losing skills

The situation is different in the case of emigration by those with high levels of skill. It also brings economic benefits, and when the expatriates return they bring with them important overseas connections, which can improve access to capital and technology, as well as business contacts for firms in the country of origin.

But, on the negative side, large outflows of high-skilled workers can reduce growth in the origin country. Education and health services in the countries of origin may be impaired due to the loss of personnel. As well, the country loses its return on high-skilled workers trained at public expense..."

While generally friendly to e/immigration, the Catholic Church, using social science data from the 1960's, has frowned upon "brain drain" - the transnational migration of highly skilled workers from developing countries to developed countries.  In a though provoking book (forthcoming), VIllanova's Michele Pistone argues that the social science data underlying the Church's position is wrong (or at least has been superceded).  Her research, much like the World Bank's report, suggests that the development picture is much more complex than the Church seemed to assume 30 or 40 years ago, and that the so-called "brain drain" may actually have a positive effect on developing countries. 

I have invited Professor Pistone to comment on the World Bank's report and on her own work in this area and look forward to receiving her comments.

Michael