The Least Developed Countries Report 2012

Harnessing Remittances
and Diaspora
Knowledge to Build
Productive Capacities
Pr...
The Least Developed Countries Report 2012

This presentation
• LDC Economic Trends and Outlook
• Harnessing Remittances an...
LDC EconomicTrends
and Outlook
The Least Developed Countries Report 2012

Recent trends
• The average real rate of GDP growth of LDCs was 4.2%
in 2011, d...
The Least Developed Countries Report 2012

Recent trends
• LDCs continued to be
extremely vulnerable to
eternal shocks
• M...
The Least Developed Countries Report 2012

Outlook
•

Given the fragility of the global economy, the outlook for LDCs is h...
Harnessing Remittances and
Diaspora Knowledge to Build
Productive Capacities

Remittances
The Least Developed Countries Report 2012

Remittances
• The Istanbul Programme of Action for LDCs stressed that
“Remittan...
The Least Developed Countries Report 2012

Remittances: Magnitude
•

•

•
•
•
•

Why are remittance flows to the LDCs grow...
The Least Developed Countries Report 2012

Remittances: Magnitude

•

In 2011, at US $ 27
billion, remittances
to LDCs wer...
The Least Developed Countries Report 2012

• Following 8 LDCs received more remittances than FDI and
ODA between 2008 and ...
The Least Developed Countries Report 2012

Remittances: Magnitude

Remittances are
highly concentrated:
top three LDC
reci...
The Least Developed Countries Report 2012

Remittances: Methods and Costs
•
•
•
•
•

Migrants use formal and informal chan...
The Least Developed Countries Report 2012

Remittances: positive impacts
• Macroeconomic effects:
– Support growth through...
The Least Developed Countries Report 2012

Remittances: adverse impacts

• Macroeconomic effects:
– May put pressure on th...
Harnessing Remittances and
Diaspora Knowledge to Build
Productive Capacities

Diaspora knowledge
The Least Developed Countries Report 2012

Brain drain: Magnitude
• It is the migration of highly-skilled professionals su...
The Least Developed Countries Report 2012

Brain drain: Effects
•

•

Adverse
 less human capital leading to lower produc...
The Least Developed Countries Report 2012

Brain drain: Net effects
Brain drain rate of country groups

•

20
15
10
5

ec
...
Harnessing Remittances and
Diaspora Knowledge to Build
Productive Capacities
Policies
A.On Remittances
B.On Diaspora knowl...
The Least Developed Countries Report 2012
A. Policies on remittances

Reduce cost of remitting
• increase competition betw...
The Least Developed Countries Report 2012
B. Policies on Diaspora knowledge

Mobilize Diaspora knowledge networks in the l...
The Least Developed Countries Report 2012
C. Policy on Diaspora knowledge and investment

UNCTAD proposes creation of new ...
The Least Developed Countries Report 2012
Policy framework for the Scheme

•

International Level:
Create synergy and cohe...
The Least Developed Countries Report 2012

Key messages of Report
•
•
•

•

Remittances are growing and more important for...
Thank you
UNCTAD LEAST DEVELOP
Upcoming SlideShare
Loading in …5
×

UNCTAD LEAST DEVELOP

447 views
335 views

Published on

Published in: Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
447
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
1
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

UNCTAD LEAST DEVELOP

  1. 1. The Least Developed Countries Report 2012 Harnessing Remittances and Diaspora Knowledge to Build Productive Capacities Presented by: Sebastian C. Kopulande Chief Executive Officer
  2. 2. The Least Developed Countries Report 2012 This presentation • LDC Economic Trends and Outlook • Harnessing Remittances and Diaspora Knowledge to Build Productive Capacities  Remittances  Diaspora knowledge  Policy agenda
  3. 3. LDC EconomicTrends and Outlook
  4. 4. The Least Developed Countries Report 2012 Recent trends • The average real rate of GDP growth of LDCs was 4.2% in 2011, down from 5.6% in 2010, and was also way below the 7.9% in 2002-2008 • Trade in 2011 increased by 23%, surpassing the precrisis level • Private financial flows declined for three consecutive years, offset by an increase in official flows • After peaking at almost $19 billion in 2008, FDI has been declining for 3 years, and amounted to only $15 billion in 2011
  5. 5. The Least Developed Countries Report 2012 Recent trends • LDCs continued to be extremely vulnerable to eternal shocks • Many countries have high fiscal and current account deficits • High commodity prices supported growth in the last three years, but also high food prices have been detrimental to many LDCs
  6. 6. The Least Developed Countries Report 2012 Outlook • Given the fragility of the global economy, the outlook for LDCs is highly uncertain • Fiscal and monetary policy have less scope to provide a stimulus to the economy today than in 2008-2009 • LDCs have to prepare for a possibility of a lengthy period of stagnation and deflation, and to deal with a crisis that originates elsewhere • Of particular concern are external shocks from reversals of commodity prices and drying up of financing options
  7. 7. Harnessing Remittances and Diaspora Knowledge to Build Productive Capacities Remittances
  8. 8. The Least Developed Countries Report 2012 Remittances • The Istanbul Programme of Action for LDCs stressed that “Remittances are significant private financial resources for households in countries of origin of migration. There is a need for further efforts to lower the transaction costs of remittances and create opportunities for developmentoriented investment…” • Remittances constitute a significant source of external financing for LDCs, and should be mobilized for expansion and diversification of productive capacities • However, remittances cannot be considered as a substitute for FDI, ODA, debt relief, domestic resource mobilization, or other sources of finance for development
  9. 9. The Least Developed Countries Report 2012 Remittances: Magnitude • • • • • • Why are remittance flows to the LDCs growing? The number of people who emigrated from LDCs increased from 19 million in 2000 to 27 million in 2010=3.3% of LDC population 80% of LDC emigrants live in developing countries(the South), mostly in South Asia, the Middle East and Africa Remittances to LDCs grew from $3.5 billion in 1990 to $27 billion in 2011=8 times Remittances amount to 4.4% of GDP and 15% of exports, compared with 1.6% and 4.5% for other developing countries Between 2008 and 2010, they constituted >20% of GDPs of Lesotho, Samoa, Haiti and Nepal. From 2009 t0 2011, Nepal and Haiti got more forex from remittances than from exports.
  10. 10. The Least Developed Countries Report 2012 Remittances: Magnitude • In 2011, at US $ 27 billion, remittances to LDCs were almost double the value of FDI inflows ($15 billion) • Were only surpassed by official development assistance (ODA) as a source of foreign financing ($42 billion)
  11. 11. The Least Developed Countries Report 2012 • Following 8 LDCs received more remittances than FDI and ODA between 2008 and 2010: Bangladesh, Haiti, Lesotho, Nepal, Samoa, Senegal, Togo, and Yemen. • Remittances surpassed FDI in Benin, Burundi, Comoros, Ethiopia, Gambia, Guinea-Bissau, Kiribati, and Uganda.
  12. 12. The Least Developed Countries Report 2012 Remittances: Magnitude Remittances are highly concentrated: top three LDC recipients (Bangladesh, Nepal and Sudan) receive 66% of total remittance inflows
  13. 13. The Least Developed Countries Report 2012 Remittances: Methods and Costs • • • • • Migrants use formal and informal channels of remitting However, the average cost of formal remitting is close to 12% in LDCs, one third higher than the global average at 9% of the value sent Had countries in Sub-Saharan Africa paid world average remittance fees, their receipts would have been $6 billion higher in 2010 South-South remitting costs higher than the North-South, and within Africa is especially costly From a policy perspective, formal channels are preferable  the best use of foreign exchange  may increase country’s creditworthiness  stimulate financial deepening, etc.
  14. 14. The Least Developed Countries Report 2012 Remittances: positive impacts • Macroeconomic effects: – Support growth through investment and financial deepening – Less volatile than other sources of foreign exchange • Microeconomic effects: – Contribute to household income smoothing and diversification – Reduce poverty, ambiguous effect on inequality – Improve human capital formation through better health and education
  15. 15. The Least Developed Countries Report 2012 Remittances: adverse impacts • Macroeconomic effects: – May put pressure on the non-tradable sector (appreciation of the exchange rate; real estate bubbles) – May reduce labour supply and create a culture of dependency • Microeconomic effects: – Mostly used for consumption The challenge is how to channel these vast private money flows into improving productive capacities
  16. 16. Harnessing Remittances and Diaspora Knowledge to Build Productive Capacities Diaspora knowledge
  17. 17. The Least Developed Countries Report 2012 Brain drain: Magnitude • It is the migration of highly-skilled professionals such as engineers, physicians, scientists, teachers, etc. to foreign countries • Brain drain from LDCs  Some 2 million people with university education live abroad  Their numbers are rapidly growing: now 54% higher than in 2000 • Destination countries  2/3 highly skilled LDC migrants go to developed countries  1/3 go to oil exporting Middle-East and neighbouring countries
  18. 18. The Least Developed Countries Report 2012 Brain drain: Effects • • Adverse  less human capital leading to lower productivity and economic growth  reduced activity in S&T, health, education, innovation  Tax losses, reduced Government social sector investment  comparative advantage shifts away from skill-intensive activities  weakens institution-building Benefits  favours education: Immigrants to developed countries generally go to better schools and remittances pay for education.  Develop Diaspora knowledge networks which can be utilised  Diaspora can help increase international trade and investment  returnees bring accumulated savings, knowledge and networks
  19. 19. The Least Developed Countries Report 2012 Brain drain: Net effects Brain drain rate of country groups • 20 15 10 5 ec on om ie s pe d De ve lo Ec on om ie s in tr a ns i tio n co ut nr ie s O th er de ve lp in g LD Cs 0 Balance of effects of brain drain depends partly on brain drain rate, ie. the proportion of highly qualified people leaving to work abroad.  Above 20% adverse impact likely to overwhelm positive effects • BUT: LDCs: higher rates than other country groups Policy action required for benefits to materialize ZAMBIA BD RATE: 1990: 32% 2000: 25%
  20. 20. Harnessing Remittances and Diaspora Knowledge to Build Productive Capacities Policies A.On Remittances B.On Diaspora knowledge C.On Diaspora Investment
  21. 21. The Least Developed Countries Report 2012 A. Policies on remittances Reduce cost of remitting • increase competition between remittance service providers • promote partnerships between banks and microfinance institutions • strengthen involvement of post offices  improve their infrastructure and connectivity • enable secure and stable financial sector • boost use of mobile phones (m-payments)
  22. 22. The Least Developed Countries Report 2012 B. Policies on Diaspora knowledge Mobilize Diaspora knowledge networks in the local development process • Objectives:  To help better integration in global production networks  Diaspora knowledge will help domestic firms acquire new capabilities and technologies and improve their capacity for “learning to learn”. • Measures:  Get Diaspora to organize itself  Home country government actively supports networks  Home country incorporates networks in national development strategies and domestic industrial policy
  23. 23. The Least Developed Countries Report 2012 C. Policy on Diaspora knowledge and investment UNCTAD proposes creation of new scheme: Investing in Diaspora Knowledge Transfer • Objectives:  transfer knowledge to home country  diversify economic activity  develop productive capacities • Measures:  Migrants contribute knowledge, experience and networks accumulated abroad as well as funds.  Diaspora invests in middle-to high-tech sectors and skillintensive activities  Financial assistance from international financing institution  Supportive environment such as industrial parks, local partners, etc.
  24. 24. The Least Developed Countries Report 2012 Policy framework for the Scheme • International Level: Create synergy and coherence between stakeholders by coordinating efforts of:     • home country governments diaspora associations host country governments international organizations Domestic Level  Macro:  Adopt policies to attract private investment  Encourage use of remittances for productive purposes  Implement prudential financial and regulatory reform to create diaspora investor confidence  Meso:  promote innovation in productive sectors
  25. 25. The Least Developed Countries Report 2012 Key messages of Report • • • • Remittances are growing and more important for LDCs than for other countries Intensity of brain drain is much higher in LDCs than in other countries Boosting contribution of remittances and diasporas to LDC development requires pro-active policy action:  Development and diversification of financial sector  Lower remittance cost  Diaspora engagement programmes  Diaspora knowledge networks  Investing in Diaspora Knowledge Transfer scheme  Macro policy to crowd in private investment Effective policies require coordination and collaboration among stakeholders
  26. 26. Thank you

×