Diaspora and Economy: Effects of Global Economic Slowdown on Remittances
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Diaspora and Economy: Effects of Global Economic Slowdown on Remittances

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    Diaspora and Economy: Effects of Global Economic Slowdown on Remittances Diaspora and Economy: Effects of Global Economic Slowdown on Remittances Presentation Transcript

    • Diaspora & Economy: Effects of the EconomicSlowdown on RemittancesMuhammad SohaibBBRM-10Sustainable Development Policy Institute1
    • Outline• Introduction• Global Economic Slowdown• Patterns and Trends in Migration• Contributions of Diaspora• Remittances Flow to Developing Countries• Remittances to Pakistan• Some Case Studies• GoP Initiatives• Future Outlook• Overseas Pakistanis: Manifestos of Political Parties 2013
    • Introduction• Diaspora• Pakistani Diaspora• Types of DiasporaLabor DiasporaBrain DrainImmigrants• Destinations of Migrants
    • Global Economic Slowdown• Global Financial Crisis 2007• Global Economy Contracted in 2008-2009• Downturn directly hit the advanced economies• In 2009 GDP per capita turned down in 60 out of 107developing economies (UN 2010)Source: UN Global Economic Outlook 2012
    • Patterns and Trends in MigrationThere are few jumps and down falls, but there is a big climb started in 200505000010000015000020000025000030000035000040000045000050000019721973197419751976197719781979198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012Total Migrants
    • Type Wise Migrants2000 - 2012Decline in unskilled migrants050000100000150000200000250000 2000200120022003200420052006200720082009201020112012Highly QualifiedHighly SkilledSkilledSemi SkilledUn-Skilled
    • Pakistani Workers Registered for Overseas Employment2002-2012Migrant flow to: UAE drops in 2008, Saudi Arabia 2009 and diminishes in Oman in 2009Data Source: BEOE0500001000001500002000002500003000002002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Saudi ArabiaUAEOman
    • Pakistani Workers Registered for Overseas Employment2002-2012Decline observed in the case of Khyber Pakhtunkhwa and Punjab050000100000150000200000250000300000PunjabSindhK.PakhtunkhwaBalochistanAzad KashmirN.AreaTribal Area
    • Contributions of DiasporasDiasporas contributed in three facets• Remittances• Brain Drain(Brain Drain is a talent mobility; which can bring benefits to both host and home countries)- South Asian Brain Dain- Silicon valley of India (Bangalore)• Role as Intermediaries-Diasporas can connect home countries to foreign investors- Cultural interpreters
    • Remittances to Developing CountriesRemittances have shown resilience than FDI since theglobal financial crisisDeveloping countries received $ 401 billion remittancesin 2012(World Bank)In history it can be observe that remittance remainedstable(Mexican financial crisis 1995, Asian Market Crisis 1997)
    • Remittances to Developing CountriesThe remittance flows to developing countries in 2006 were 235 $billion and it increased in 2007with a growth rate of 22.9 percent to 289 $billion, and increased to 338 $billion in 2008 with agrowth rate of 16.9 percent
    • Top 10 Recipients of Remittances in 2012696024 2321 2114 1410701020304050607080India China Philipines Mexico Nigeria Egypt Banladesh Pakistan Vietnam Lebnan$USBillionThree South Asian countries are in top 10 recipientsSource: World Bank, Migration and Remittance Brief 20
    • Workers’ Remittances to Pakistan2002-2011Was there no impact of Global Financial Crisis on Remittances?Data Source: State Bank of Pakistan02,0004,0006,0008,00010,00012,0002002 2003 2004 2005 2006 2007 2008 2009 2010 2011US$Million
    • Some Case StudiesBarajas et al (2010) investigated the effect of economicslow down on worker’s remittances of Africa(Many countries were forecast to lose 0.1 to 0.2 percent GDP growth due to fall inremittances in 2009)Ratha. D and Mahapatra. S argued that the globalfinancial crisis has caused decline in remittance flows tolow income economiesBalan et al (2011) evaluated the remittances andmigration flows during the financial crisis in theEuropean Countries
    • Some Case StudiesRaihan .S (2010) examined the impact of globalfinancial crisis on remittances, exports and poverty inBangladesh.(He analyzed the negative shock in remittance will result decline in real GDP by 0.1percent)Raihan. S (2010) explored the impact of global financialcrisis on migration and remittances in Bangladesh.(The macro statistics showed positive growth in remittances during the crisis but therewere large number of household who faced fall in remittance inflows by migrants)
    • Some Case StudiesAhmed et al. (2010) examined the impact ofremittances on economy and household welfare(If remittances inflows reduced to 50 percent, the GDP growth declined to 0.7% as aresult and investment and imports also decreased to 7.7 percent and 6.4 percentrespectively)Ahmed and Sugiyarto (2012) find that improvement ofhousehold consumption and investment are positivelyand consumer prices are negatively associated withremittances
    • GoP Initiatives• BOEO is working under the emigration ordinance of1979• Overseas Employment Corporation (OEC)• Overseas Pakistanis Foundation (OPF)• Foreign Remittance Card Scheme• Pakistan Remittance Initiative
    • Workers’ Remittances from Abroad2002-2011• Remittances not affected during and after the crisis– Traditional migrant economies in Middle East remainedinsulated (except UAE)– Indian Diaspora in Middle East was a lesser competitiongiven the appreciation of Indian currency– The weakening of Pakistani currency implied thatDiaspora’s consumer surplus increased when purchase wasmade locally
    • Future Outlook• Demand Side Factors The flow of remittances will continue to increase in theforeseeable future Pakistani migrants have embarked upon non-traditionalworkplace destinations as well East is a good Option The banking sector in Pakistan is now viewing the remittancesas a major source of business
    • Future Outlook• Supply Side Factors EU will remain in recession North America will continue to Maintain its strict visa policies China and East Asia will be future engines for EconomicGrowth Middle East will continue to diversify away from South AsianMigrants
    • Recommendations• Diaspora may be engaged beyond their monetarycontributions : in terms of knowledge and technology• Migration Policy needs to be aligned with the DevelopmentPolicy• Banking Sector can play a vital role• Role of Overseas Pakistanis Division needs to be revisited
    • Overseas Pakistanis: Political PartiesManifestos 2013• Pakistan Muslim League – N• Pakistan Tehreek-i-Insaf• Pakistan Peoples Party• Pakistan Muslim League - Q• Muttahida Qauami Movement
    • sohaib@sdpi.org23Thank You