Migration & Remittances in Developing Countries

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Diaspora & Economy: Effects of the Economic Slowdown on Migration & Remittances

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Migration & Remittances in Developing Countries

  1. 1. Diaspora & Economy: Effects of the Economic Slowdown on Migration & Remittances Dr. Vaqar Ahmed Sustainable Development Policy InstituteIslamabad Policy Research Institute – 15 November 2012 1
  2. 2. Outline• Patterns and Trends in Migration• Remittances Vs. Migration flow• Demand Side vs. Supply Side of Remittances• Countering Dutch Disease• Aligning migration policy with development priorities
  3. 3. Pakistani Workers Registered for Overseas Employment 2002-2012 900000 800000 700000 600000 Numbers 500000 400000 300000 200000 100000 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Migrant flow starts to diminish in 2008 but still rising, however it plummets in 2009
  4. 4. Pakistani Workers Registered for Overseas Employment 2002-2012 300000 Saudi Arabia 250000 200000Number 150000 UAE 100000 Oman 50000 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Migrant flow to: UAE drops in 2008, Saudi Arabia 2009 and diminishes in Oman in 2009
  5. 5. Pakistani Workers Registered for Overseas Employment 2002-2012 250000 200000 150000 Highly QualifiedNumber Highly Skilled 100000 Skilled Semi Skilled 50000 Un-Skilled 0 2000 2011 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Regressive Impact: Decline in unskilled migrants was relatively greater 2012
  6. 6. Pakistani Workers Registered for Overseas Employment 2002-2012 300000 250000 Punjab 200000 SindhNumber 150000 K.Pakhtunkhwa Balochistan 100000 Azad Kashmir 50000 N.Area Tribal Area 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Khyber Pakhtunkhwa and Punjab saw the largest decline
  7. 7. Workers’ Remittances from Abroad 2002-2011 12,000 10,000 8,000US $ Million 6,000 4,000 2,000 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Does this imply that there was no impact of Global Financial Crisis on Remittances?
  8. 8. Workers’ Remittances from Abroad 2002-2011• Why were Remittances not affected? – Traditional migrant economies in Middle East remained insulated (except UAE) – Indian Diaspora in Middle East was a lesser competition given the appreciation of Indian currency – The weakening of Pakistani currency implied that Diaspora’s consumer surplus increased when purchase was made locally• Remittances could have been higher in the event of no global financial crisis (how much?)
  9. 9. Workers’ Remittances: Futuristic Outlook Demand Side• Most believe that the flow will continue to increase• With tightening of regulations in US and Continental Europe, Pakistani migrants have embarked to untraditional destinations too• For Diaspora weak Pakistani currency implies a buyers’ market in Pakistan• Banking sector in Pakistan envisaging targeted financial instruments for Diaspora
  10. 10. Workers’ Remittances: Futuristic Outlook Demand Side Supply Side• Most believe that the flow will • EU region will remain in recession continue to increase for medium term• With tightening of regulations in • North America will maintain US and Continental Europe, stringent visa regime and work Pakistani migrants have approvals embarked to untraditional • Middle East will continue to destinations too diversify away from South Asian• For Diaspora weak Pakistani migrants currency implies a buyers’ market • Look East – may be an option! in Pakistan • Pakistanis losing on opportunities• Banking sector in Pakistan associated with Chinese proximity envisaging targeted financial instruments for Diaspora
  11. 11. Workers’ Remittances and Dutch Disease• Is a Remittances-led welfare model sustainable? – Keralas example not very encouraging• What about Dutch Disease? Increasing Appreciates Curtails Increase in Hurts Exports Remittances Exchange Rates Production Unemployment
  12. 12. Countering Dutch Disease• Engaging Diaspora beyond monetary contributions – Knowledge and technology transfer• Banking sector instruments: Going beyond Pakistan Remittances Initiative• Directing remittances towards higher multiplier and value added activity• Caution: Government cannot do sector picking, however it can create a level playing filed for all sectors• Example: Indian Diaspora’s own budget airline for Indians in Middle East (workers’ class). Pakistan’s Sialkot Chamber of Commerce engaging Diaspora for Municipal Investment
  13. 13. Aligning Migration Policy with Development Policy• Framework for Economic Growth Silent on Migration / Remittance Prospects• What about Federal Budget  Can it be a short term instrument for leveraging remittances?• Overseas Pakistan’s Division
  14. 14. Thank Youwww.sdpi.org, www.sdpi.tv vaqar@sdpi.org 14

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