BOARD OF EXECUTIVE DIRECTORS OF THE WORLD BANK

1 ufrgsmodelunitednations2010

BOARD OF EXECUTIVE DIRECTORS OF THE WORLD BANK

Dear Officials,

It is a pleasure to welcome you to the Board of Executive Directors of World

Bank. Considering the huge success of the committee in the three last editions of

UFRGSMUN, once more it will be simulated. The idea of the Board is to give the

chance of dealing with economic issues interrelated with other areas, such as

international politics, which is a different opportunity to interact in the simulation.

This year the main areas contemplated in the World Bank are economics and

social policies related to migrants and remittances impact on world economy. The staff

is composed by five members, and we have been working through all the year to give

the necessary information for officials to have a profitable discussion.

Caio Mascarello Teixeira is an UFRGSMUN enthusiast. This 8th semester

Business Administration student from UFRGS was World Bank assistant director in

2007 and World Bank director in 2008. Caio’s areas of interest range from Conflict

Management to Sustainable Development. He has participated three times as a delegate

in models UN: in the UFRGSMUN 2006 representing Mozambique at UNCTAD, in the

AMUN 2007 as a British ambassador at the ECOFIN, and in the UFRGSMUN 2009

representing Mauritius at The Board of Executive Directors of the World Bank

Lídia Brochier graduated in International Relations at UFRGS in 2009. She

participated in the UFRGSMUN 2008 as an official – representing Mexico delegation –

at the Board of Executive Directors of the World Bank and in the UFRGSMUN 2009

she took part of the academic staff as an assistant director at the World Bank. Her major

fields of interest are International Political Economy and Macroeconomics.

Fernanda Barth Barasuol is at her 8th semester in International Relations at

UFRGS. She participated in UFRGSMUN 2008 at Sochum representing the delegation

of Mexico. Her areas of interest are International politics and International economy.

Mário Augusto Sogari is currently at his 8th semester in International Relations

at UFRGS. He participated in previous editions of the UFRGSMUN's World Bank

Committee in 2008 and 2009, when he represented, respectively, the delegation of

Belgium and the delegation of Saudi Arabia. Mário's areas of interest include Asian

Studies, regarding Politics and Economics, and International Security affairs.


Thomás Dorigon is at his 4th semester in International Relations at UFRGS. In

2009 he had a great experience working as a member of UFRGSMUN administrative

staff. This year he is interested in taking part of the model as a member of the World

Bank, in order to improve his knowledge about this UN body and about the topic which

is going to be discussed: Migration and Remittances. His range of interest encompasses

from culture and political organization to impacts of economic crises on daily life.

We sincerely hope you have a great experience at UFRGSMUN and we are

looking forward to meeting you!

Caio Mascarello Teixeira Lídia Brochier

Director Director

Fernanda Barth Barasuol Mário Augusto Sogari Thomás Dorigon

Assistant director Assistant director Assistant director


INTRODUCTION

The World Bank

Created following the ratification of the Bretton Woods Agreement, at the end

of World War II, the World Bank is an association of five development institutions. The

two main ones are the International Bank for Reconstruction and Development (IBRD)

and the International Development Association (IDA); the other are the International

Finance Corporation, the Multilateral Guarantee Agency, and the International Centre

for the Settlement of Investment Disputes.

The World Bank is composed by 185 shareholders, who take part in two main

decision organs: the Board of Governors, which is the ultimate police maker and is

composed by all members, and the Board of Executive Directors, which has specific

duties delegated by the Board of Governors.

There are 24 representatives in the Board of Executive Directors. Each of the

five largest shareholders, which are France, Germany, Japan, the United Kingdom and

the United States, appoints one executive director, while each of the other 19 executive

directors represents a group of the remaining members. The Board is responsible for

creating the Bank's general policies, including loans, country assistance strategies and

financial decisions.

From the post-war reconstruction, which was the objective of the Bank to

Reconstruction and Development, the goal of the World Bank evolved to a wider

proposal. Nowadays, the Bank sees the reconstructions as just a part of its work,

focusing mainly on poverty reduction, sustainable growth and development. The World

Bank is deeply concerned about the global issues mostly regarding the achievement of

the Millennium Goals.


MIGRANTS AND REMITTANCES IMPACT ON WORLD ECONOMY

By Caio Mascarello Teixeira, Lídia Brochier, Fernanda Barth Barasuol,Mário Augusto

Sogari and Thomás Dorigon.

1. HISTORICAL BACKGROUND

Migration has always been a central part of human history. Especially after

Europeans arrived in the Americas, international migration has been a vital element in

the economic and social development process. However, from the colonization of the

New World starting in the 16th century, to the migration of workers during the 19th

century, to today’s flow of immigrants from less developed to developed countries, the

characteristics of international migration have varied widely and continue to puzzle

theorists as to its causes and consequences.

The last three decades have experienced a steady increase in migrations, and in

2005 the number of international migrants amounted to 188 million (TAYLOR, 2006).

This raises a number of concerns regarding the economic effects of international

migration in both countries of origin and destination, but also in regard to the

assimilation of migrants in the receiving country’s society – which can prove to be a

challenging process.

As migration becomes a more and more complex issue it is vital to look back

into the historical process that led to this unprecedented amount of international

migrations as well as into the theories that have tried to understand it.

1.1. Theories

There are several theories concerning international migration. Most of them

focus on trying to explain what leads workers to migrate, using different explanatory

tools. Some of them concentrate on economic aspects, others on historical and structural

dynamics and some on cultural factors. “At present there is no single, coherent theory of

international migration, only a set of theories that have developed largely in isolation

from one another” (MASSEY et al, 1993, p. 432). However, even though these theories

might seem to have competitive answers, it is advisable to see them as different pieces

that combined form a more comprehensive picture of international migration.


The first theories concerning international migration were economic ones.

These theories derived from the neoclassical theory of economics, and used its two

most important tools to try to explain migration: the rational behavior of actors and the

balance between offer and demand. The neoclassical theory was inspired by the

migrations of the 19th century, which comprised most of European workers migrating

to the New World as a means to alleviate demographic pressures on origin countries and

search for better opportunities.

By studying these migration movements, neoclassical theorists such as Lewis,

Todaro, Borjas and Chiswick developed a theory around “push and pull” factors. The

“push” factors were factors of repulsion, which led workers to emigrate, such as

population growth, low life standards, lack of opportunities and political repression. The

“pull” factors, which attracted immigrants to a particular country, were demand for

workers, availability of land, good opportunities and political freedom (FONSECA,

2007).

As can be seen, according to the neoclassical theory, the main factor leading to

migration is the availability of jobs or other economic opportunities. Population growth

would lead to a larger offer of labor force and this surplus would then migrate to

countries where the demand for labor was higher and therefore salaries would also be

higher. As rational actors, according to the neoclassics, workers would continue to

migrate in search of better gains until a balance was reached between wage levels in

countries of origin and destination (FONSECA, 2007).

Another economic perspective on migration is offered by the new economics

of migration. This theory mostly complements the neoclassical theory, adding to it new

factors, such as collective decision (by a household instead of an individual) and the

matter of remittances. Its main proponents are Oded Stark, J. Edward Taylor and

Shlomo Yitzhaki (MASSEY et al, 1993).

The authors of the new economics of migration theory propose that

households try to diversify the allocation of their resources - and sending family

members to work temporarily in another country is a way to do that. The migrant family

member, through remittances, would than represent a form of “insurance” in the case of

economic hardships in the country of origin (FONSECA, 2007).

Another factor contributing to migration according to the new economic theory

would be the lack of social mobility in countries of origin. The remittances sent by


family members abroad, or the capital acquired by temporary work on a foreign

country, would provide the means to overcome capital constraints and therefore make

investments that might enable social ascension (DESA, 1997).

Also using economic tools but offering a different approach, the segmented

labor market theory, developed by Piore, defends that international migration is a

consequence of the demands of modern society’s labor markets. The central argument

of this theory does not focus on the decisions of migrants but on the structure of labor

market in the receiving countries. These markets, it suggests, are divided into two

sectors. The first of these sectors is capital-intensive and offers positions for skilled

professionals, which are filled by nationals. The second sector offers lower wages for

unqualified workers and – since nationals refuse to occupy these positions – is filled by

migrants. Consequently, there will always be a need for migrant workers to occupy

those jobs nationals reject (FONSECA, 2007; DESA, 1997).

Parting from the traditional economic approach, the historical-structural

perspective was developed based on the world-system theory of Immanuel Wallerstein.

The authors of this theory, such as Portes and Walton, Elizabeth Petras and Ewa

Morawska, defend that migration is a natural consequence of the growing economic and

political inequalities between the center and the periphery of the international system

(MASSEY et al, 1993).

The first concern of the historical-structural theorists was the “brain drain”, the

flow of high-skilled professionals from the periphery to the center. This would represent

a loss of human capital that would hinder the development of the countries of origin.

Subsequently, the historical-structural approach focuses on migration as a

whole, and concludes that it is a natural consequence of the expansion of the capitalist

system to non-capitalist and pre-capitalist societies. An important facet of the

penetration of capitalism into these societies would be the one represented by the media.

Through television, cinema and the internet, the countries of the center would create

among the populations of the periphery an image of the lifestyle of the developed

countries as an ideal to be chased, thus encouraging migration (FONSECA, 2007).

Finally, the migratory systems theories offer two complementing approaches:

the social networks theory and the cumulative cause theory. The social networks

theory, defended by authors such as Douglas Massey, is based on the existence of

interpersonal connections between new migrants and established migrants. These


connections may be of blood, friendship or simply of a common nationality. What the

theory suggests is that the existence of networks that provide assistance for new

migrants lowers the risks of migrating, and thus makes it more appealing and more

likely to happen.

The cumulative cause theory, developed by Myrdal, suggests that an original

migration flow can create a sort of chain effect by affecting the decision of other

nationals on whether to migrate or not. Therefore, there is the creation of a “migration

culture” that tends to perpetuate the flow of migrants from a country of origin towards

the same receiving country – sometimes to a specific region in the country of

destination (FONSECA, 2007; DESA, 1997).

Bearing this in mind, it is desirable to understand migration as a phenomenon

caused not only by one isolated factor, but also by an association of many factors,

manly economic and political ones.

1.2. Historical Evolution of Migration

Migration has been a vital element in the development of most – if not all –

societies. That being said, “although humankind has always been migratory, large

intercontinental migration began in the sixteenth century during the age of European

expansion” (DESA, 2004, p. 35). It is also interesting to note that, if migration has been

a constant, the reasons that lead to the choice of migrating have varied through time. In

fact, one of the largest flows of international migration was not a choice at all. Along

with the European population sent to the New World between the 16th and 19th

centuries, a large population of African slaves was forcefully transferred to the

Americas. Between 1700 and 1850 at least 10 million Africans were transported to the

American continent to work as slaves (DESA, 2004). It was the end of the slave trade

that gave impulse to a new flow of migration of European workers looking for a better

life in the New World, which would be a central element of development during the first

global century.

1.2.1. 1820-1920: the first Global Century


The period known as the first Global Century began with the end of the

Napoleonic Wars and ended along with the First World War1. It was a period of

unprecedented freedom of movement of goods, capital, and labor. In Western Europe

and North America it was also characterized by economic growth and rapid

technological progress (FONSECA, 2007).

In Europe, improvements in nutrition, hygiene and preventive medicine

contributed to population growth. Combined with the effects of the Industrial

Revolution, this resulted in the existence of a considerable labor surplus in the

continent. At the same time, technological innovations in transportation, in terms of

both transoceanic shipping and transcontinental railways led to a decline in

transportation costs. These factors, combined with a demand for labor created by the

end of the slave trade, gave impetus to migration, which increased significantly.

The greatest incentive to migration, however, was possibly the large wage gap

between countries of origin and destination.

Until 1890 most migrants were from the United Kingdom and Germany:

between 1815-1924, 18 million British individuals and 5 to 6 million Germans

emigrated overseas. During this period the Scandinavian countries also were an

important origin of migrant workers. From the 1890s on migrants from Southern,

Central and Eastern Europe became dominant, especially from Italy, Poland, Portugal,

Spain and the Russian Empire. This change was largely influenced by the raise in wages

in both the United Kingdom and Germany. It also coincides with the migration boom

that occurred towards the end of the 19th century. Between 1821-1850 the average

annual number of migrants in the main countries of destination was 188.000. Between

1881-1915 it reached 1.047.000 migrants (DESA, 2004).

The main destinations for migrants remained the same throughout the 1820-

1920 period: the United States, Canada, Argentina and Brazil. The United States was

the preferred destination, especially among British immigrants: 3/5 of British migrants

went to the US. (DESA, 2004).

1 The “first Global Century”, also referred to as the first era of mass migration, is a term generally used as a means of comparison with the current (second) global century. Although it is not clear who coined the term, it is largely used and accepted in international migration literature. For examples see DESA (1997; 2004), FONSECA (2007), TAYLOR (2006). For a comparison of the two global centuries see HATTON and WILLIANSOM (2006) or WILLIANSOM (2002).


Destinations in South America, specially Brazil and Argentina but also Chile

and Uruguay, received mostly immigrants from Southern, Central and Eastern Europe.

Between 1870 and 1930 around 4 million European workers immigrated to Brazil, and

about 2 million to Argentina. An important factor of attraction of immigrants to these

countries was the State policies created with this purpose, such as subsidies and

distribution of land. Although other countries did not receive many European

immigrants, some of them received workers from other regions, sometimes in a coolie

system2. Peru, for example, received a large contingent of Chinese workers, and in 1877

the Chinese represented 2% of the country’s population. (BETHELL, 2005).

The United States was the country which received the highest number of

immigrants during the 1820-1920 period. However, since it already had a large

population, the demographic growth due to immigration in the US was not as significant

as in other countries. On the other hand, only between 1870 and 1910 Argentina

experienced an increase of 60% of its population and 86% of its workforce (DESA,

2004).

In the beginning of the 20th century the United States decided to impose more

restrictions on immigration. In 1907 the Immigration Act established a tax of US$4 per

immigrant. In 1917 this tax was raised to US$8 and a literacy test was now imposed as a

condition to enter the country. These Acts reflected broader changes in American public

opinion against immigrants, especially those from Southern, Central and Eastern

Europe, which the US population found harder to assimilate due to cultural differences.

In accordance with this view, the 1921 Emergency Quota Act limited the number of

immigrants to 3% of the population of each nationality currently residing in the US.

These measures, along with the First World War, represented the demise of the north-

north migration, which had been a central part of the development of the first global

century.

Although not all countries decided to adopt restrictive measures – and in fact

Brazil and Argentina were still recruiting immigrants – the beginning of the war made

migration increasingly difficult. The number of migrants fell steeply during the conflict.

Argentina, which had received nearly 500 thousand immigrants in the period of 1911-15

only received 2.4 thousand between 1916-1920 (BETHELL, 2005). 2 The coolie system consisted of “the transportation of workers, often over long distances, to perform agricultural or infrastructural work at destination under a variety of binding contract arrangements, all of which involved the obligation to work for the contractor for a period of time” (DESA, 2004, p.35).


1.2.2. 1920-1980

Although migration increased again in the early 1920s, this recovery proved to

be temporary. During the 1930s the combination of restrictive policies and the

economic crisis that affected both countries of origin and destination discouraged

migration. During the whole period between the 1929 economic crisis and the end of the

Second World War migration was extremely limited. Although it could be argued that

some countries in the south still received a considerable amount of migrants, they

represent an exception in the general tendency of decline in migration.

After the end of the Second World War in 1945 migration regained momentum

due mostly to the economic growth in developed countries. The reconstruction process

and subsequent economic expansion transformed Europe in a destination for

immigrants.

The economic prosperity of the developed countries also encouraged their

governments to adopt less restrictive policies in regard to immigration. This provoked a

change in the origin of migrants, who now came mostly from recently independent

countries in Asia and Africa, and Latin America. Three types of migration movements

became predominant: temporary migrations from the countries in the European

periphery towards Western Europe; migration of workers from the former colonies

towards their former metropolis; and permanent migrations to North America and

Australia (FONSECA, 2007).

An important migration flow that gained impetus in this period was that of

Mexican workers to the United States. In 1942 started the Bracero Programme, which

allowed the entrance of temporary Mexican workers into the country, mostly to help

with the war effort. Although the programme ended in 1964 “the number of unskilled

migrant workers from Mexico living in the United States had increased significantly

both as a result of admissions under the Programme and because of the undocumented

migration that developed parallel to it” (DESA, 2004, p.55).

A similar process took place between Turkey and Germany. In the 1960s, faced

with the rapid growth of its population, Turkey signed a series of Agreements with

several European countries which allowed Turkish workers to migrate temporarily to

those countries. Although such Agreements were signed with six countries (Germany,


Belgium, Austria, the Netherlands, France and Sweden) about 80% of all Turkish

workers to emigrate chose the same destination: Germany. The official labor

recruitment ended in the early 1970s, but migration did not stop. Rather, it changed,

being now characterized by two types of flows: one of family members of those workers

who had migrated legally through the agreements, and one of workers who continued to

migrate – now illegally (Focus Migration, 2006).

In sum, the period of 1920-1980 was mostly an interval between two periods of

intense migration flows. The first one occurred during the first Global Century, and the

second started in 1980 and still continues. It was during the second period, however,

that crucial changes occurred, especially regarding the origin and destination of

migrants, who now came mostly from developing countries to the developed world.

1.2.3. 1980-2010: the new migration boom

Migration flows started to become increasingly significant in the 1960s, when

the number of migrants reached 76 million worldwide, but it was in the 1980s that it

reached the mark of 100 million migrants worldwide. During this decade, the annual

rate of growth in the number of migrants reached its peak: 4.3% (DESA, 2004).

The most important factors leading to this new migration boom are the

growing interdependence among countries, the continued and even growing income disparities between them, cheaper and more accessible means of transportation, and growing demographic disparities, particularly between the developed and the developing world (DESA, 2004, p. 56).

The new migration boom is even more impressive than that occurred between

1820 and 1914. In 1910, at the peak of the first boom, 1 out of every 48 persons was an

international migrant; in 2000, 1 out of every 35 persons was a migrant, representing a

total of 175 million persons living outside their country of birth (DESA, 2004).

Although the first Global Century and the period after 1980 are both periods of

intense migration, the characteristics of these migration movements vary widely:

In the nineteenth century, European countries were able to export the surplus labor that had resulted from their agrarian and industrial revolutions and their demographic transition to countries that needed to increase their workforce and their population. This option is not open at present to developing countries experiencing high unemployment and underemployment rates. Likewise, there is no country ready to accept large numbers of immigrants for settlement (DESA, 2004, p. 53).


One major difference between the migration booms is the current existence of

restrictive measures on migration in most countries, especially those who are main

destinations for immigrants. The proposition of governments that implement policies

with the intent of lowering migration has increased steadily since the 1970s. In 1976

only 6% of governments had such policies; in 1986, 19%; and in 1995, 33% (UN,

1997). Most developed countries have policies to control migration, such as the

extensive control of the countries borders, a restricted access to visas and the limitation

of a migrants’ access to employment. Some countries have more repressive policies.

The United States, for example, have criminalized the hiring of undocumented workers

and restricted the access of legal migrants to public benefits, such as food stamps

(Migration Policy Institute, 2005).

Despite these measures, and in some cases due to their existence, the latest

decades have also shown an increase in the number of undocumented migrants – in

2000 there were 7 million unauthorized immigrants in the United States alone (DESA,

2004).

The concentration of migrants in developed countries has also increased: while

in 1960 42% of international migrants lived in developed countries and 58% in

developing countries, in 2000 the numbers were respectively 63% and 37%. Although

these rates may not seem impressive, they become more significant if one considers the

difference in populations of the developed and developing countries. In 1990,

international migrants constituted 4.5% of the population in more developed regions and

1.6% of that in less developed regions. Furthermore, the ratio of net migration rate to

population growth rate in the period of 1990-1995 was of 45% in developed regions and

–2.8% in less developed regions (DESA, 2004)3.

In sum,

although developing countries as a whole have been consistently losing population because of international migration, their overall rate of natural increase is still so high that net emigration has had only a small impact on population trends (DESA, 2004, p.64).

On the other hand, international migration has been significant in maintaining

population growth or, in some cases, preventing population reduction in the developed

world. Europe, for example, would have experienced a population decline of 4.4 million

3 The net migration rate in 1990-95 in more developed regions was 1.8 per 1.000 and in less developed regions –0.5 per 1.000. In the same period the population growth rate was of 4.0 per 1.000 in more developed regions ad 17.6 per 1.000 in es developed regions.


between 1995 and 2000 if not for the entrance of 5 million immigrants into the

continent.

Apart from traditional destinations such as the United States and Western

Europe, other regions have experienced an important growth in international migration.

In South Eastern and Eastern Asia, the main destinations are the newly-industrialized

countries (India, Malaysia and Thailand) and Japan. It is noteworthy, though, that most

of the immigration in these countries is undocumented. In the Persian Gulf, more

specifically the member-countries of the Gulf Cooperation Council (GCC)4, a large

portion of the labor needed for the building of infrastructure was brought in from other

countries. In 2000, between 25 and 70 per cent of the populations of the GCC countries

were foreign-born (DESA, 2004).

Alongside international migrations, remittances sent to countries of origin by

migrants also increased significantly during this period – and in fact, they have

increased more rapidly than the number of migrants. In 1970 remittances amounted to

US$2 billion, in 1989 they reached US$61 billion and in 2004 remittances amounted to

US$216 billion. About 70% of all remittances go to less developed countries,

representing for some of them their most important source of foreign exchange (DESA,

1997; TAYLOR, 2006).

2. STATEMENT OF THE ISSUE

2.1. Introduction on Migration and Remittances

The movements of migration and remittances related to it have become an

increasingly important part of globalization. They have impacts both on host and origin

countries. Besides, it is important to consider that trade policies and international

agreements have influence over these flows.

The analysis of migrations and the amount of remittances are considered of high

complexity due to its current situation, and efforts are needed to figure out possible

solutions.

4 The Gulf Cooperation Council is an organization with economic and social objectives, whose members

are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. More information at http://www.gcc-sg.org/eng/ Last access: August 17, 2010.


2.1.1. Concept of Migration

According to the Human Migration Guide (HMG, 2005), migration of human

beings is the movement of people from one place in the world to another for the purpose

of taking permanent or semi-permanent residence, usually across a political boundary.

In this sense, migrants are people who integrate these movements, moving from one

country, where they have residence, to another country5.

Migrants can be divided in two kinds: long-term migrants and short-term

migrants. Long-term migrants are people who move to a country other than that of

his/her usual residence for a period of at least a year, so the country of destination

effectively becomes his/her new country of usual residence. Short-term migrants are

people who move to a country other than that of their usual residence for a period of at

least three months but less than a year6 (WB, Migration and Remittances Factbook,

2008).

2.1.2. Types of Migration

When we focus on migration and development, almost all kinds of migration

have their impacts, being them positive or negative.

Forced migration happens when a government forces a large group of people

out of a region, usually based on ethnicity or religion (HMG, 2005).

Chain migration is the case when a series of migration occurs within a family

or defined group of people, and often begins when one family member sends money to

bring other family members to the new location. Chain migration results in migration

fields (HMG, 2005), which are associated with the so-called Diaspora (WB, 2008). A

Diaspora is characterized when migrants move to migrant communities in one or more

receiving countries while maintaining strong social, business and political ties with the

5 It is important to make clear that we are conceptualizing what is called international migration (it is different from internal migration which does not involve a displacement from country to country). 6 Short-term migration does not entail cases where the movement to a country is for purposes of recreation, holiday, visits to friends and relatives, business, medical treatment, or religious pilgrimage.


sending country, and usually forming transnational networks through which money,

goods, ideas and people flow (O’NEIL, 2003; SKELDON, 2007).

Return migration or Circular migration is probably the most relevant

movement for developing countries: it grips the voluntary movements of immigrants

back to their place of origin (HMG, 2005). A growing proportion of migration is

circular, occupying a central place in policy and discussion on migration (O’NEIL,

2003).

Skilled migration is associated with the brain drain and is usually understood as

a synonymous with legal, permanent migration, as developed countries compete with

each other to fill structural labor shortages in an increasingly knowledge-based

economy (DRC, 2003).

Last, irregular migration refers to a broad group of migrants that includes

migrants who enter countries illegally, failed asylum seekers, migrants who overstay

their visas, and those who have legal right to remain in the country but work illegally.

Exact numbers of irregular migrants are difficult to estimate, but it is clear that irregular

migration occurs on a large scale and is a global phenomenon (SWARD; SABATES-

WHEELER, 2008).

2.1.3. Concept of Remittances

Migrant remittances can be broadly defined as monetary transfers that migrants

make to their country of origin. In other words, remittances are financial flows

associated with migration (IOM, 2006). More specifically, remittances refer to the

portion of migrant income that, in the form of either funds or goods, flows back into the

country of origin, primarily to support families back home (HERTLEIN; VADEAN,

2006).

The World Bank defines remittances as the sum of workers’ remittances,

compensation of employees and migrants’ transfers (WB, 2008). This is based on the

definition of the International Monetary Fund (IMF), which divides remittances in three

categories: Compensation of employees (i.e. gross earnings of workers residing abroad

for less than 12 months); workers’ remittances (i.e. the value of monetary transfers sent

home by workers residing abroad for more than one year); and migrants’ transfers (i.e.


net wealth of migrants who move from one country of employment to another)

(HERTLEIN; VADEAN, 2006).

2.1.4. Remittances: motivations and role of the flows

Several are the migrants’ motives for remitting, but three apparently separate

motivating factors can be observed. First of all, migrants are concerned towards family

members still in the country of origin, who rely on the support of the migrant who

assumes the role of provider. Secondly, self-interest can also be a significant motive to

remit – family may look after any property the migrant has left behind. At last, relatives

often cover the high cost of moving and settling abroad and are later repaid once the

migrant has established himself in the destination country (HERTLEIN; VADEAN,

2006).

Interestingly, there is also a correlation between the duration of stay abroad and

the size of remittances. Temporary migrants who leave their families in the country of

origin tend to remit the highest sums in relation to their incomes. On the other hand,

permanent emigrants generally migrate with their family members. Consequently, over

time they have less and less contact with remaining relatives at home, which gradually

reduces remittances. Besides, a change in status from undocumented to legal migrant

often leads to a rise in the value of remittances, due to improved wage levels. However,

these increases in remittances decline again as the migrants integrate themselves into the

host society – mainly because they find themselves able to bring their families to the

host country, what obviously means diminishing remittances flows to the origin country

(HERTLEIN; VADEAN, 2006).

Remittances have grown both in nominal terms and in relation to source

countries’ Gross Domestic Product (GDPs), far outpacing growth in official

development assistance. According to the World Bank, recorded remittances flows

doubled between the year 2000 and the year 2005.

Furthermore, remittances are more unwavering than foreign investments.

Besides, they can be countercyclical, contributing to the stabilization of the economy.

Thus, more countries are looking to remittances as a development tool. After

foreign direct investment and trade-related earnings, remittances are the largest financial

flow into developing countries. This information reinforces the role of remittances as a


more stable source of income for households in origin countries – the flow of

remittances is less influenced by economic downturns7 (O’NEIL, 2003; WB, 2010;

ALFIERI; HAVINGA; HVIDSTEN, 2005).

Skeldon (2007) emphasizes that remittances can contribute to the reduction of

poverty and unemployment, and to the improvement of the quality of life in

communities of origin. In opposition, remittances can also exacerbate inequalities both

within communities and between regions.

To make the notion of how remittances flow more tangible, it is useful to

mention the top 10 recipients of migrant remittances (in USD) among developing

countries in 2008. They are, in decreasing order: India, China, Mexico, Philippines,

Poland, Nigeria, Egypt, Romania, Bangladesh and Vietnam. And also the top 10

remittance-sending countries (in USD): United States, Saudi Arabia, Switzerland,

Germany, Russian Federation, Spain, Italy, Luxemburg, Netherlands and Malaysia

(RATHA; MOHAPATRA; SILWAL, 2009a).

2.2. Migration and Development

There is a continuous debate on the impacts of migration on development, both

on developing and developed countries.

On the one hand, development is the alleviation of poverty and migration

clearly contributes to this. Migration that results in remittances raises the income of

families of migrants and sustains many poor households. Much of that additional

income is spent on debt repayment, housing, food, and basic health care and education.

Thus, in some extent, migration and remittances contribute to the progress of the

economy and the social development in origin countries (O’NEIL, 2003).

On the other hand, development entails long-term structural change:

improvements in knowledge, human capital, and infrastructure, and creation of efficient

and accessible markets, governments, public services, and other institutions. When we

consider this point of view, the effects of migration become blurred. Some analysts

worry that migration, rather than promoting structural changes needed for development,

7 The authors, when refer to remittances as being less vulnerable, are usually making a comparison with IDEs flows.


may actually delay them while creating unsustainable local and family economies

(O’NEIL, 2003).

An issue upon which there is larger agreement is the direction of public

policies on the matter: stopping migration is neither possible nor desirable. Policies

intended to stop undocumented immigration inflows may cause undocumented migrants

to spend longer amounts of time in the host country and encourage them to bring their

families (O’NEIL, 2003). For both sending and receiving countries, efforts to limit or

control overall levels of migration too often result in limited success and unforeseen

consequences (SKELDON, 2007).

Also, migration is a ‘normal’ feature of human populations and an integral part

of development (SKELDON, 2007). But development policies will not resolve the

question of migration. Migration flows change in volume, direction and composition

over time and in tandem with some type of development. In this sense, policies that are

designed to optimize the benefits of existing flows are more likely to promote

development.

There should be focus on

maximizing the development benefits of migration by increasing the positive impacts of remittances and taking advantage of the learning and business opportunities offered by circular migration and the transnational connections that migrants create (O’NEIL, 2003).

Little has been said about cultural effects of migration. However, it is generally

accepted that it has impacts over origin and host countries. Human migration affects

population patterns and characteristics, social and cultural patterns and processes,

economies, and physical environments. As people move, their cultural traits and ideas

diffuse along with them, creating and modifying cultural landscapes (HMG, 2005).

2.2.1 Impacts on Countries of Origin

For decades the migration debate has focused on the impact of immigration on

destination countries. Very recently, however, attention has increasingly turned to the

situation in the countries of origin, developing countries in particular, with a focus on

the interplay between development and migration (HERTLEIN; VADEAN, 2006).

Focusing first on positive impacts, it can be said that circular migration can

create, at a minimum, the potential for increased knowledge exchange, if not gain


(‘brain gain’). Also the Diaspora communities can serve as a conduit for developing

trade connections, increasing transfers of capital and exchanging technology

(SKELDON, 2007).

The steady growth of remittances can help reducing poverty in recipient

communities. However, what is more agreed is that remittances on individual recipient

household incomes can be seen as having favorable impacts, at least in the short-term.

For instance, Mexican households benefit largely from remittances. In 2004, the influx

of remittances represented 47% of the family income in this country (HERTLEIN;

VADEAN, 2006).

An example of how the countercyclical role of remittances can have good

impacts on origin countries is the one given by the Philippines. During the 1997-98

Asian Financial crisis, this country avoided a recession solely through the surge of

remittances, which sustained domestic consumption and helped the country overcome a

slump in exports (HERTLEIN; VADEAN, 2006).

The stability of remittances may reduce the probability of investors fleeing;

they can contribute to financial deepening if the institutional environment is proper and

increase a country’s access to international capital markets (WB, 2010). Over the fields

of health and education, the most important migration-related benefits – besides

increased financial support – are the heightened awareness and knowledge of these

issues that migrants gain by living abroad (HERTLEIN; VADEAN, 2006).

Summarizing, additional income from remittances has positive effects on poverty

reduction, consumer spending and investment, however the impacts of remittances on

income distribution varies case by case (HERTLEIN; VADEAN, 2006; WB, 2010;

IOM, 2006).

It is also essential to take into consideration the negative impacts of migration

and remittances in origin countries. In countries that suffer from human capital

shortages, skilled migration can reduce the capacity to deliver key services (WB, 2010).

Another problem is that remittance fees are unnecessarily high and place a

disproportionate burden on the poor migrants, who tend to send money in smaller

amounts to origin countries (WB, 2010).

Finally, Skeldon (2007) stresses that promoting the Diaspora communities –

transnational networks of migrants – can be a precipitated measure, taking into account


that usually the country of origin does not have institutions in place. This would mean

giving preference to migration policies over development ones.

2.2.2. Impacts on host countries

One of the most important impacts of migration refers to the effects of migrant

workers over the labor market of host countries. Irregular migrants are often seen to

take jobs from citizens in receiving countries – potentially contributing to

unemployment – and to be a drain on government services. However, there is some

evidence that these negative stereotypes of irregular migrants are overstated (SWARD;

SABATES-WHEELER, 2008). Pritchett (2006) has noted that developed states spend

US$ 17 billion per year fighting illegal immigration. He argues that if the same

countries let in enough migrants to increase their workforces by 3% this would result in

US$ 300 billion in additional remittances flowing to poor countries and US$ 51 billion

in growth for receiving countries.

Considering legal immigration, it is important to highlight that receiving

nations are clearly benefiting from an influx of students and workers who often have

skills needed to overcome bottlenecks in production or research. Even if foreign

students leave after graduating in the host country, they still provide much in the way of

research and teaching services before they depart (REGETS, 2003).

What opponents of highly skilled migration often fear is the exclusion of

natives from jobs and opportunities for formal education – a reduction in native skill

levels. However, most part of migrants takes the jobs that employ low-skilled workers

(REGETS, 2003).

Another complaint made by host countries is that migration drives down their

wages. The point is that the little empirical evidence to support these arguments are

usually weak or ambiguous (United Nations Population Fund – UNFPA, 2006).

Some studies suggest that temporary migration could provide a win-win-win

outcome in which host countries benefit from access to needed labor, and migrants and

home countries benefit from greater human capital and labor productivity upon

migrants’ return (MORRISON; SCHIFF; SJOBLOM, 2007).

Furthermore, immigration in those countries going through the second

demographic transition – characterized by low fertility, and sometimes negative growth,


and high proportion of non-working elderly people – can help to offset population

decline and the decrease in the working-age population. The counterargument here is

the one concerning with preservation of a cultural identity (UNFPA, 2006).

As underscored, migration has positive and negative impacts both over host

and origin countries. The core issue is how to minimize the negative effects and

maximize the positive ones.

2.3 Current Situation and Trends on Migration

The economic turnover back in 2008 has severely affected remittance flows

and migrations path worldwide due to economic recession in many host countries

(reducing jobs for migrants, for instance). Before the financial crisis, remittances were

growing stronger. In 2007 the remittance flow to developing countries reached the

amount of $285 billion (RATHA; MOHAPATRA; SILWAL, 2009a) and in 2008 it

went up 17% to the amount of $336 billion (RATHA; MOHAPATRA; SILWAL,

2010). However, it has slowed down since the last quarter of 2008. According to the

World Bank Migration and Development Brief, in 2009, officially recorded remittance

flow to developing nations went down 6%, reaching the amount of $316 billion. Taking

in account some recovery movement in global economy, it is expected that remittance

flows are going up by 6.2% in 2010 and 7.1% in 2011 (RATHA; MOHAPATRA;

SILWAL, 2010).

On a regional perspective, the financial crisis has seriously affected the United

States’ remittance flows to Latin America. The continuing weakness in the job market

in the United States and the slowdown on the construction sector, major employer of

immigrants, reflected in 2009 as an estimated 12% fall on remittance flows to Latin

America and the Caribbean (RATHA; MOHAPATRA; SILWAL, 2010). On the same

track, remittance flows from different origin countries to other regions have also fallen

in 2009, such as Eastern Europe and Central Asia (21%) and the Middle East and North

Africa (8%). “In contrast, flows to South Asia and East Asia have been strong”

(RATHA; MOHAPATRA; SILWAL, 2009a). This is explained by two main reasons:

(a) most of Asian migrants are working in GCC countries, which have not reduced

hiring migrants; and (b) many migrants are switching motivations for remittances, from


consumption to investments, due to lower assets price, rising interest rate differentials

and a depreciation of the local currency.

Bearing in mind these regional trends it is possible to establish three paths.

First, remittances are more resilient where migration destinations are more diverse. For

example, the migration destinations to India and the Philippines are diversified, a fact

which explains why flows to these countries fell modestly in 2009 (RATHA;

MOHAPATRA; SILWAL, 2010). Second, “the lower the barrier to labor mobility, the

stronger the link between remittance and economic cycle in that corridor” (RATHA;

MOHAPATRA; SILWAL, 2010, p. 7). For instance, migrants from neighboring

countries are allowed to move in and out through the Russia’s porous border in reflect

to the economic situation. In such case, it is possible to observe that remittances are

correlated to business cycle in the source country. Third, movements on the exchange

rate produce valuation effects. “Remittance flows to the Kyrgyz Republic, Armenia, and

Tajikistan declined (…) during 2009, partly because of the depreciation of the Russian

ruble” (RATHA; MOHAPATRA; SILWAL, 2010, p. 9).

2.3.1. Policy Response

Taking into account the effects of the recent financial crisis (weakening job

market, unemployment, etc), it has risen in many receiving countries social commotion

urging for restriction on immigration and tighter border control, as well as anti-

immigration sentiments. For instance, measures to reduce the inflows of new migrants

are being considered by several European countries (RATHA; MOHAPATRA;

SILWAL, 2010).

One of the main concerns raised on rich nations by the crisis is to protect jobs

of native workers. However, there is little evidence that immigration control would

reduce immigration or protect native workers (RATHA; MOHAPATRA; SILWAL,

2009a). Actually, there are some risks on increasing immigration control in order to

protect native workers, since it “might imply a trade-off between protecting native

workers from job competition and protecting employers” (RATHA; MOHAPATRA;

SILWAL, 2009b, 12). In short term, business need flexibility on hiring and firing

decisions to cut costs and survive the crisis, which in medium term may lead to a more

sustainable recovery. Therefore, a market-based approach may be the road to take in


order to help employers and firms to preserve the productive capacity in receiving

countries, and also maintain the lifeline of remittances to sending countries (RATHA;

MOHAPATRA; SILWAL, 2009a).

In the same pace in which migration control is getting tighter, the duration of

migration is increasing, the ones staying are likely to continue to send remittances

home. According to data collected by the Mexican Migration Project, the period during

which Mexican migrants stay in the United States has increased from 8 months in the

beginning of 1990s to 15 months recently. It is believed that such reluctance is not only

caused by the difficulties in coming back but due to the significantly higher incomes

that migrants are earning in developed nations despite the crisis (RATHA;

MOHAPATRA; SILWAL, 2010).

On the issue, some countries are giving financial incentives to promote return

migration. So far, such programs do not seem to work as expected. In Spain, for

instance, in November 2008 the government introduced financial incentives to

immigrants voluntary return to their home countries, but 6 months after the beginning of

the program the government had not received the amount of applications it had expected

(MINISTERIO DE TRABAJO E INMIGRACION, 2009). Other countries that have

adopted similar programs are Japan and the Czech Republic in 2009, although both have

not achieved the expected results.

Through the opposite perspective, migrant-sending countries are working on

compensating any possible reduction on new migration flow by trying to establish guest

worker programs with destination countries (RATHA; MOHAPATRA; SILWAL,

2009b). For instance, India is working on mobility partnerships with European nations

(NVO, 2009). Although numbers have not shown such movement, sending countries are

concerned about a large group of migrants returning home. If that becomes true, it is

suggested that countries take advantage of it, once migrants come back home with

skills, entrepreneurial energy and capital. Forced by the Persian Gulf War in 1991,

many migrants returned to Jordan during the war, and in this period “Jordan's economy

performed better than many observers had expected between 1991 and 1993 because of

the return of relatively skilled workers from the Gulf” (RATHA; MOHAPATRA;

SILWAL, 2009b, p.11).

On a different perspective, it is relevant to stress that remittances are the first to

come in times of crisis and natural disasters, money sent by relatives tends to come


much faster to the ones in need than international support. Bearing this in mind, three

days after the devastating earthquake in Haiti, the United States granted temporary

protected status (TPS) for 18 months to any Haitian already in the US. The TPS status

benefits over 200,000 Haitians “currently residing in the US without proper documents

to live and work in the US legally, without fear of deportation” (RATHA;

MOHAPATRA; SILWAL, 2010, p.5).

2.4. Topics on Migration and Remittance

2.4.1. Brain Drain

Brain drain is defined as “the departure of skilled migrants from their place of

origin to another country” (CHAPPELL; GLENNIE, 2010, p. 1). A classical example of

brain drain is an overworked doctor from a impoverish country that migrates to a

developed nation looking for better payment and conditions (CHAPPELL; GLENNIE,

2010). There are several reasons that stimulate skilled migrants to move to a more

developed country. Wage is considered the main cause of brain drain, once it differs

widely between countries. It is a key motivation for students and those working in

professions as health care, in which skills are easily transferable. Employment

opportunity is other key reason for migration and it is related to the point in which

migrants are in their careers, being of top importance for students. Access to

professional development – better training and more varied experiences - is an

important reason to move for migrants who are already employed.

The decision to leave the home country is also shaped by social and

professional networks. Networks influence migrants in different levels, for some it is

what makes the possibility of migrating come true, whilst others might see it as the

reason to move. It is also important to stress that socioeconomic and political climate at

home may influence someone’s intentions to migrate. Skilled workers might be forced

to leave their home country also as asylum seekers or refugees (CHAPPELL;

GLENNIE, 2010).

It is advocated that the brain drain phenomenon threatens development causing

“serious negative impact on the delivery of critical services such as health, education

and administration” on sending countries (OECD, 2006). In a compared perspective,


taking into account the share of a country’s nationals with a university degree who live

in OECD countries, it is possible to highlight that low-income countries suffer

disproportionately from brain drain (OECD, 2010). For instance, more than half of all

university graduates in sub-Saharan Africa and Central America migrate to OECD

nations (OECD, 2010).

Fig. 1. Share of a country's nationals with a university degree living in an (other) OECD country.

Less than 2 % Less than 5 % Less than 10 %

Less than 20 % Over 20 % Not included

Source: OECD, 2010.

For a long time it was believed that brain drain was permanent, although in the

last decade researchers and policymakers have started to observe that many skilled

migrants return to their countries of origin, or move back and forth between different

destinations. This phenomenon is described as “brain circulation” (CHAPPELL;

GLENNIE, 2010). According to Chappell and Glennie (2010), there are three core

reasons that motivate high skilled migrants to return: “improvements of the situation at

home, the feeling of belonging to one’s culture and society, and the achievement of a

specific goal” (CHAPPELL; GLENNIE, 2010, p. 5). Therefore, developing countries

could benefit from knowledge and skills migrants bring home, which is demonstrated

by startup companies of returned Indian migrants, for instance (OECD, 2010).

2.4.2. Migration of Women


Gender is a central piece of causes and consequences of international

migration. The United Nations Population Division estimates that the participation of

women or girls among international migrants is around 49%. The most common reason

of women migration is officially as dependent family members of other migrants or to

marry someone in another country. However it is considerably increasing the number of

women that are migrating on their own, in order to become the principal wage earners

for their families (UN, 2004). Although women movement is usually voluntary,

“women and girls are also forced migrants leaving their countries in order to flee

conflict, persecution, environmental degradation, natural disasters or other situations

that affect their security, livelihood or habitat” (UN, 2004, p. 27).

According to the United Nations (2004), the social roles of women, autonomy

and capacity to decide, access to funding, existing gender stratification in countries of

origin and destination are key factors on women’s migration. For instance, gender

inequality can play a major role in women’s decision to migrate, when their economic,

political and social expectations cannot be fulfilled in their country of origin (UN,

2004).

The Migration Police Institute – MPI (2003) stresses that women also migrate

to respond the demand for labor in receiving countries that are gender-specific and

which reflects existing values, norms, stereotypes and hierarchies based on gender, “the

demand for domestic workers, nurses, and entertainers focused on the recruitment of

migrant women” (UN, 2004, p. 28), for instance. Women are commonly underpaid

compared to migrant men - who are concentrated in higher-paying jobs - due to labor

market discrimination based on gender and the segregation of women in conventionally

female positions. Besides, women hired to work in domestic services or those who are

working illegally abroad are in severe risk of abuse, and depending on the destination

countries they may have no protection under laws to report mistreatment (UN, 2004).

From a sociological perspective, migrating has positive outcomes for women in

general. According to the United Nations (2004), women migrant workers tend to

become more independent and gain autonomy, changing gender relations within their

families. Moreover, it is stressed that when migrant women return to their countries of

origin they often disseminate the importance of rights and opportunities for women.

Also, when male relatives (husbands or parents) migrate, women that remain in the

country of origin usually need to take to hand financial and other responsibilities that


were in their relatives before, and this situation “provides women the opportunity of

gaining autonomy and experience in decision-making” (UN, 2004, p. 28).

3. PREVIOUS INTERNATIONAL ACTION

3.1. Group of Eight - G8

The Group of Eight was created as a forum, in France, 1975, by governments

of six countries: France, Germany, Italy, Japan, the United Kingdom and the United

States. In 1976, Canada joined the group, and twenty years later Russia added the G7,

thus creating the G8 (BBC, 2010).

Through a series of summits, the G8 guarantees that leaders from these

countries discuss major and complex international issues. In a more specific context,

the G8 is deeply aware of the importance and the impact of remittance flows both in

sending and receiving countries, especially in those economies which are more fragile

and susceptible to international crises. Thus, in recent summits and documents, it has

been emphasized the need to collect reliable data and evidence, to cut off several costs

in formal channels – and therefore make emigrants send their money in a safer and

better way, avoiding informal means – and to make people aware of how this amount of

money could be invested, for instance, in financial domestic markets and in

microeconomic levels (G8 Information Centre, 2010).

In 2004, at the Sea Island Summit, the G8 met in order to discuss the topic

“applying the power of entrepreneurship to the eradication of poverty”. In such

direction, it was debated ways to facilitate remittance flows in order to help families and

small business. The G8 understands that these flows play a key role in private-sector

development efforts, enabling families to receive needed capital for education, housing

and small business start-ups and expansion. Therefore

the Group decided to work with the World Bank, IMF, and other bodies to improve data on remittance flows and to develop standards for data collection in both sending and receiving countries and also decided to lead an international effort to help reduce the cost of sending remittances (G8 Sea Island Summit, 2004).

The G8 Action Plan set the following guidelines to achieve this goal:

[a] Make it easier for people in sending and receiving countries to engage in financial transactions through formal financial system, [b] reduce the cost of remittance services through the promotion of competition, the use of


innovative payment instruments, and by enhancing access to formal financial systems in sending and receiving countries, [c] encourage cooperation between remittance service providers and local financial institutions, including microfinance entities and credit unions, [d] support dialogue with governments, civil society, and the private sector to address specific infrastructure and regulatory impediments - governments should ensure non-discriminatory access to payment systems for the private sector (…), [e] seek to provide opportunities for recipients of remittance inflows to utilize that income efficiently in domestic financial markets, including for building and improving their homes (G8 Action Plan, 2004).

In Berlin, 2007, the G8 Summit embraced not only the eight traditional

countries, but also the European Commission, representatives from other countries,

international organizations, the private sector and the civil society. Two goals were

analyzed in this meeting: first, assessing how effective the measures taken to facilitate

remittance flows at the 2004 Sea Island Summit had been, and stimulate them. Second,

the meeting intended to improve formal ways through which migrants could both send

and receive money from abroad, by initiating a dialog and promoting other potential

measures (Germany Federal Ministry of Finance, 2007).

In this summit it was stressed that

[a] that National statistical offices and central banks are encouraged to continue their efforts to improve the quality of data used to compile estimates of remittance flows within the Balance of Payments framework, [b] that the Luxembourg Group continues to play an active role in helping countries improve their estimates of remittance flows and [c] that the establishment of a Global Remittance Working Group, led by an International Organization, should be considered by the G8 (Germany Federal Ministry of Finance, 2007).

The participants also welcomed the preparation of General Principles for

International Remittance Services by the international taskforce led by the Bank for

International Settlements and the World Bank. The reason why this preparation has

been emphasized is that policymakers should use these principles as an instrument to

improve the regulatory framework of the remittance industry, foster competition,

enhance transparency and strengthen consumer protection in their remittance markets.

Other important concerns raised and stressed during the summit, strongly related to

heightening the awareness of the remittances phenomenon, are: to encourage further

research on the development impact, to support the implementation of the General

Principles for International Remittances Services, and to initiate pilot programs with a

demonstration effect (BIS, 2007).

One of the main contributions to the general process of migration was the

creation, at the G8 Summit in Hokkaido Toyako, Japan, in 2008, of the Global


Remittances Working Group, understood as an important step in order to build up an

international organism to access more accurately the data on this matter.

We acknowledge the importance of facilitating remittance flows given their development impacts. The G8 conference on remittances in Berlin in November 2007 reviewed the actions agreed at the Sea Island Summit in 2004. In this context, we will follow-up the seven recommendations adopted at the Berlin conference on improving data, development impact, remittance services, access to finance, and innovative channels and on the creation of a Global Remittances Working Group. We appreciate the work done by international financial institutions in this regard and invite the World Bank to facilitate the work of the group and provide for coordination (IMF, 2008).

In 2009, the G8 gathered in L’Aquila, Italy, in order to discuss, among other

matters, how to ensure sustainable growth and to tackle the interlinked challenges of the

economic crisis, poverty and climate change (G8 L’Aquila Summit, 2009). Concerning

poverty, it was discussed the effects of the crisis on the migration process and

remittance flows. It was established a renewed commitment to development through

assistance to developing countries and some measures formulated in earlier summits

became more concrete. It was also stressed the need to reduce the global average cost of

transferring remittances, which is still very high and one of the main reasons why

informal channels have been used by a lot of migrants (Poverty Reduction Group,

2009).

3.2. International Monetary Fund (IMF)

The International Monetary Fund provides essential database and analysis on

the matter. Even though IMF reports are usually toward a specific country and situation,

on its World Economic Outlook IMF pointed out that “remittances can help improve a

country’s development prospects, maintain macroeconomic stability, mitigate the

impact of adverse shocks, and reduce poverty” (IMF, 2005, p. 69). The report also

stressed that remittances permit families to keep or increase “expenditure on basic

consumption, housing, education, and small-business formation” and also “promote

financial development in cash-based developing economies” (IMF, 2005, p. 72).

Therefore, the Fund sees remittance as “a welcome source of foreign financing

and should be promoted”, once they are “larger and less volatile than Official

Development Assistance, they are unrequited transfers which do not create debt service

in the future” (UNB, 2007, p.1). Yet the IMF believes that countries cannot rely


exclusively on remittance to solve financial questions, warning that “remittances are no

universal remedy and cannot substitute for good policies at home” (UNB, 2007, p.1).

The IMF also suggests that countries should promote

remittances through official channels by abstaining from dual exchange rate practices and current account restrictions, by reducing transaction costs through increased competition in the banking sector, and by fostering financial sector development more generally (FE, 2007, p.2).

3.3. The World Bank (WB)

Regarding the topic of migration and remittances, actions by the World Bank

have been pointed to the goal of broadening the international debate concerning the

issue. WB not only has been responsible for the research and aggregation of statistical

data (posed in the annually released “World Bank’s Migration Factbook”), but also has

supported and organized the elaboration of academic studies that analyze the issue in

international and regional scopes (WB, 2008b). Such studies include the “Migration and

Development Briefs”, an annual research that provides interpretation of the data

accumulated during the previous year, and that points out trends that marked the

behavior of the statistics of recent years and can be passed on to the years yet to come.

Also, the report signalizes the main regional issues regarding the topic and analyses

both the importance of economical tendencies and political actions on the phenomena.

World Bank releases also point out the importance of the migration and

remittances phenomena on social and economical development of sending and receiving

countries. It is concluded that resources originated from remittances can boost the

economical opportunities of developing countries’ families and also provide economical

advantages to developing countries such as labor market competitiveness and higher

qualification (SHAW, 2007; WB, 2008a).

The World Bank has also promoted meetings to further improve data

aggregation on remittances, such as The International Technical Meeting on Measuring

Remittances. The latest, set in Washington, in 2009, featured the cooperation of the IMF

and involved the presence of economic technicians from all over the world. Participants

discussed the need of solving issues regarding the measuring of remittances in the

nations’ balance of payment statistics, reinforcing that government agencies should

develop better information through the establishment of data. The meeting also

established the creation of a new technical working group, aiming at the coordination of


global programs of remittance measuring and making such data available. Furthermore,

some other relevant aspects were reviewed, such as recent international and regional

initiatives aimed at improving remittances data, the implications of the financial crisis

on data quality, and the use of high-frequency remittances data to measure the impact of

the crisis (WB, 2009).

3.4. World Trade Organization (WTO)

The most important measure under the scope of WTO concerning international

migration has been implemented, during Uruguay Round in 1995: the General

Agreement on Trade in Services (GATS) Mode 4 – where Mode 4 refers to one out of

four modes of supply defined by the GATS8. This mode is the one which has more

direct implications over migration and remittances.

It is interesting to note that this mode doesn’t cover people who seek access to

a labor market in general or those looking for citizenship, asylum or permanent

residence (GENT; SKELDON, 2005; CHARNOVITZ, 2002). It can be said that GATS

looks at a natural person only as a provider of services, rather than as an individual. The

movement of natural persons is discussed in the WTO mainly as a service modality,

instead of considering the broader context of allowing workers to gain work

opportunities and experience (CHARNOVITZ, 2002).

In this sense, mode 4 is still very restrictive. Service suppliers under this

movement gain entry to country for specific purposes are normally confined to one

sector9 and temporary – neither migrating on a permanent basis nor seeking entry to the

labor market (IOM, 2010).

The impacts of the supply of services agreements, resulting of mode 4, for

developing countries can be summarized in the possibility of exploiting the relative 8 According to the GATS, modes of supply in which a service can be traded are: (a) mode 1 refers to services supplied from one country to another, officially known as cross-border supply (e.g. international phone calls); (b) mode 2 involves consumers from one country making use of a service in another country, also called consumption abroad (e.g. tourism, a patient going under surgery abroad); (c) mode 3 entails companies from one country setting up subsidiaries or branches to provide services in another country, identified as commercial presence (e.g. a bank from one country setting up operations in another country); and (d) mode 4 encompasses individuals traveling from their own country to supply services in another, officially known as movement of natural persons (e.g. construction workers, artists) (GENT; SKELDON, 2005). 9 There is a ‘sectoral classification’ list provided by WTO, but it is opened to interpretation. The list is available at http://www.wto.org/english/tratop_e/serv_e/serv_e.htm. Last accessed: August 25,2010.


abundance of medium and less skilled workers. Also the temporary feature of mode 4

movements intends to help avoiding the ‘brain drain’ (GENT; SKELDON, 2005).

However, the outcomes of the services supply’s agreements are considered to

be truly far from what would be desirable. Mode 4 trade accounts for a small portion of

total trade in services – about 1% only (GENT; SKELDON, 2005). Considering the

overall migration, the labor migrants, and even temporary labor migrants, those under

mode 4 movements represent a little fraction not identified precisely by estimates

(WTO, 2004).

WTO law covers only a narrow band of the whole spectrum of issues regarding

the movement of people. However, some progress can be observed. The Doha Round

initiated the discussions over the need of a greater recognition of foreign licenses. The

GATS already calls for cooperation between WTO Members and relevant international

and nongovernmental organizations with the purpose of leading to the adoption of

common international standards for recognition and for the practice of service trades

and professions. As well, it has been proposed the creation of a GATS visa to facilitate

the movements of workers (CHARNOVITZ, 2002).

3.5. United Nations (UN)

The topic of international migration has been one of great interest for the UN,

especially regarding the relation between migration, remittances and development. Most

of the work in this area is carried through the Population Division of the Department of

Social and Economic Affairs (DESA) of the UN, which works on collecting data and

organizing meetings on the subject.

Recognizing the need to “review and coordinate the growing information on

international migration among interested organizations” (UN, 2002) the Population

Division of the DESA has been organizing since 2002 annual Coordination Meetings on

International Migration. At each meeting current issues regarding international

migration are discussed by representatives of different agencies of the UN, the UN

Secretariat, international organizations (such as the International Organization for

Migration and the Organization for Cooperation and Development), and by government

representatives.


The latest Coordination Meeting was held 2009. Taking place in the aftermath

of the latest financial crisis, the meeting had as its objectives

(a) to assess the impact of economic and financial crisis on international migration, (b) to review initiatives to strengthen the evidence base on international migration and development, and (c) to exchange information among United Nations entities and other relevant international organizations on current and planned activities in the area of international migration and development (UN, 2009).

Discussions on the topic of international migration also took place in the

framework of the General Assembly of the United Nations. In 2006 this organ decided

to dedicate a High Level Dialogue to the discussion of the relation between migration,

development and the effects of state policies on migration. The Dialogue consisted of

four interactive Round Tables, each addressing a different topic: Table 1 discussed the

effects of international migration on social and economic development; Table 2 focused

on the human rights of migrants and on the combat of smuggling of migrants and traffic

of persons; Table 3 discussed the multidimensional aspect of international migration,

including remittances; and Table 4 treated the building of partnerships at the multilateral

and bilateral levels to the benefit of both states and migrants (UN, 2006).

Through the United Nations Development Programme, the UN has also

treated the role of women on international migration. Through this Programme, it was

launched a document emphasizing the need to discuss women’s role in the use of

remittances in order to produce and stimulate a responsible local development:

gender based analysis is essential to not only have an improved understanding of the remittances in flow through the informal sector but also for defining sustainable and participatory interventions for creating entrepreneurship opportunities at the bottom of the pyramid that can assist in transition of the informal private sector towards greater formality (UNDP, 2007)

The main goals of this project are:

[a] To increase awareness and improve access by women headed remittance- recipient households to productive resources while augmenting their assets and to strengthening their capacities; [b] To provide relevant information and support local and national governments to identify and formulate policies to optimize the utilization of remittances for sustainable livelihoods and building social capital; [c] To enhance capacity of key stakeholders to integrate gender into policies, programmes, projects, and other initiatives linking remittances with sustainable livelihoods and building social capital (UNDP, 2007).

The UN has also been dedicated to the gathering of information and data

regarding international migration, such as the number (“stock”) of international


migrants by country of birth and citizenship, sex and age as enumerated by population

censuses, etc10.

4. BLOC POSITIONS

4.1. Developed Nations

Among receiving countries, the United States of America has been one of the

top destinations for immigrants (WB, 2008b). According to the US Citizenship and

Immigration Services (USCIS), immigration represents not only a stack of opportunities

(regarding mutual economical gains between the State and immigrant families) but

challenges as well. The USCIS believes that globalization has made the United States an

attractive destination due to the country’s economical strength and its civic values, but it

also has comprised a great number of issues regarding national security, since it can

contribute to mass migration, both legal and illegal. In order to provide better service to

its immigrants and mitigate security problems, the United States has been focused on

raising its security capabilities, both within the State’s organisms and among

international cooperation, by promoting partnerships with sending countries. The

USCIS strategic plan comprising the years of 2008 to 2012 reinforces the State’s

interest on making better use of technology to increase gains in security and services,

and also on creating programs that can provide a background on the immigrants’

activities, to facilitate service provision, better integration of immigrants and to reduce

social risks (USCIS, 2007).

The European Union (EU) has been aiming at the development of a

common immigration policy, considering the demographic and economical situation of

the bloc. As its main objectives, the EU seeks to provide legal immigrants from within

the bloc with services that promote better integration, in order to maintain the principle

of freedom of movement. However, it has been stated that the EU intent to allocate

migrants in the development of specific economical sectors and regions of the bloc,

following the economical planning of the EU’s agenda, thus making more restrictions to

regions that have no priority at the time (EUROPEAN COMISSION, 2010).

10 This data is available at the United Nations Global Migration Database, at http://esa.un.org/unmigration/. Last accessed: August 18, 2010.


The EU has tried to promote development programs for sending countries

inside the bloc in order to compensate the flow of labor-force from outside these

countries. The bloc seeks to achieve such goal by making use of economical and social

policies that can further improve the countries’ situations and make them an attractive

destination for immigrants. Regarding third-country nationals residing in the EU, the

bloc has been aiming at not only providing humanitarian assistance to these individuals,

but also providing their home countries with financial assistance and readmission

agreements for immigrants to return to their countries of origin (EUROPEAN

COMISSION, 2010). Another important topic involves the combat of illegal

immigrants. Poland and Czech Republic, along other Eastern Europe Countries that

became members of EU in 2004, have been the major target of European Union

policies against illegal immigration, since the border control in these states is inefficient,

making it easier for illegals to reach EU countries (IGLICKA, 2005).

Japan has historically maintained its ethnic identity in the country, thus

putting barriers on immigration of non-Japanese descendents. With globalization’s

effects on the Japanese economics, alongside with statistics proving the country’s

negative population growth and the lack of labor force inside Japan, the State has been

reviewing its immigration policy, by making the acceptation of multi-ethnical

population possible. Specialized professionals such as nurses, medical doctors,

researchers and technicians have had a relaxation of labor influx control mechanisms.

Another principle underlined in Japan’s immigration policy involves the use of pressure

on foreign countries to make better use of control over nationals that have been deported

from Japan (KASHIWAZAKI and AKAHA, 2006). Japan has also responded to

international pressures over its lack of policies regarding human trafficking, by applying

aggressive measures against illegal work and providing better assistance to victims

(IMMIGRATION BUREAU OF JAPAN, 2010).

Australia and New Zealand have also been a great destination of

immigrants, especially after the abolishment of the ‘White Australia Policy11’, in 1966.

Both countries recognize the importance of the immigrant population for their

demographical growth and their economies. However, the tendency of facilitating labor

11 The White Australia Policy is a set of policies initiated in 1901 that restricted immigration of non-white (non-european) to the country. These policies were abolished in 1966, but only in 1973 the Australian government took effective measures to remove race as a factor in immigration policies. More information at http://www.immi.gov.au/media/fact-sheets/08abolition.htm Last accessed: August 18, 2010.


force influx was weakened by the recent economical crises, which made Australia

intend to limit the admission of skilled migrants (IOM, 2009). Australia and New

Zealand believe they can to set an example for the international community on how to

manage humanitarian assistance to refugees, immigration services provision, working

for social integration with immigrants and combating racial prejudice (DIAC, 2008;

NEW ZEALAND, 2010).

Another country that has relied on immigrant labor force in order to

combat labor shortages and reach better economic results is the Russian Federation.

Russia, that until recently did not have a proper migration policy, now seeks to promote

public policies aiming at the loosening of immigration restrictions, especially of highly-

qualified professionals. One of the strategies adopted by the government was a

preferential treatment agreements with other countries for the sending of specialized

personnel (BANJANOVIC, 2007). Although Russia recognizes the demographic

importance of immigrants and one of the causes of positive population growth, the

economical crises led to imposing of reduced numeric quotas of immigrants (IOM,

2009).

4.2. Developing Countries

Sending countries, which comprise a series of developing countries, are

also concerned with the topic of migration. In general, this group of countries have to

deal with immigration towards its on boarders as well, a fact that approaches them to

receiving countries’ concerns with security and the provision of qualified service to

legal immigrants, as it is recognized their capability of adding economical and technical

gains to the developing countries’ economies. However, sending countries also defend

in multilateral forums the need of liberalization of economic flows regarding

remittances (WB, 2008a). Since most of developing countries cannot offer their most

specialized professionals with the same opportunities offered abroad, remittances are an

important source of compensation for these States, not in the form of external aid, but as

private resources that can be helpful to raise the migrant families’ life standards. The

proposal of these countries involves diminishing barriers to remittance sending, since

“in addition to raising consumption levels, the steady stream of foreign currency

improves a country's creditworthiness for external borrowing” (WB, 2009). Sending


countries also expect immigrants to be integrated in developing countries’ economies,

thus being able to acquire knowledge and qualification, which can be useful for the

sending countries’ development if their nationals abroad decide to return. (WB, 2009).

Latin America countries support easiness in remittance transfers. Since

a large part of Latin American immigrants make permanent shifts to countries abroad,

Latin America States rely on immigrants’ ability to create economical links between

their homeland and the country were they are transferred to. Being the recipients of a

large part of remittances worldwide, these countries are willing to work alongside

receiving countries to further promote remittance expansiveness and technical

cooperation to compensate the brain drain phenomenon (WB, 2008a). Recognizing the

matter of illegal immigration, Latin American countries also seek to solve the problem

by coordinated control with receiving countries and defending the welfare of its citizens

abroad, but also stating that a social and economical cooperation approach could lead to

an improvement of the situation (WB, 2008a).

With the recent economical boom of the People’s Republic of China,

Southeast Asian countries have also seen a great number of citizens migrate, most times

illegally, to Chinese territory. Seeking opportunities in rural areas that have been left

behind by Chinese workers, when urbanization rapidly accelerated in the 1970’s, illegal

immigrants represent a great challenge to China’s domestic policy, favoring

strengthening policies specially with Mongolia and North Korea. According to the

World Bank (2009), China also represented one of the top emigrant countries in 2005,

with over 7 million people leaving the country, although only 4.2% represented tertiary

educated citizens. The Chinese government envisions a broadening of student exchange

programs to raise professional qualification (SKELDON, 2004a), as well as seeks

cooperation with receiving countries, specially the United States, to solve problems

regarding illegal immigration (MOFAOTPRC, 2009).

Indonesia is another country facing issues on migration, since its

population surplus often leaves to other Asian countries, especially Taiwan and

Malaysia. Although a part of the immigrants leave the country through legal channels, it

has been appointed that most part of Indonesians do not register as overseas contract

workers in the Indonesian Ministry of Labor (HUGO, 2007). The government has been

seeking to diminish problems by providing information and training to their migrant


population and also by cooperating alongside receiving countries to increase the

protection of the rights of Indonesian workers. Indonesia is not widely affected by the

brain drain phenomenon, but is largely benefited by remittances, although most of them

are transferred through illegal channels (HUGO, 2007).

Representing the top migrant-sending country in Asia, the Philippines

has been set by the World Bank as a positive example of policy making towards migrant

protection due to its Philippine Overseas Employment Administration, a governmental

organization that helps Philippine workers with working contract’s administration and

licensing with foreign firms and agencies. The country also developed an efficient

mechanism of remittance monitoring inside the Philippine Central Bank, and the State

has applied programs in order to incentive remittance transfers through formal channels

of banking corporations (WB, 2005). This way, the resources not only reach the families

directly, but they also are allocated by Philippine nationals abroad in funds that aim at

treating humanitarian causes and small-infrastructure programs inside country. The

Philippines has shown an historical of high dependence on remittances to mitigate

social-economic issues, such as poverty and unemployment, which have been the major

push factors of the country’s labor force (WB, 2005). In spite of that, the government

aims at continuing “exporting” Philippine labor force, indicating that further

development programs inside the nation will still depend on resources coming from

abroad (ASIS, 2006).

India also has been committed to support its nationals abroad with

financial programs that can boost the country’s economics as well. The government’s

incentives to apply a migration policy involves the importance of overseas Indians as

agents of trade, technology and investment, specially after some of these citizens started

to emerge as high-level executives of multinational corporations. Student migration and

brain drain are recurrent phenomena observed in the country. Taking this into

consideration, India has worked alongside Indians emmigrants to incentive remittance

and investment programs (such as the Overseas Indian Facilitation Centre, created in

2007) that can further improve the country’s social-economic condition (NAUJOKS,

2009).

The Middle East and North Africa (Maghreb) countries are desolated by

migratory issues. These regions are estimated as one of the top corridors of illegal

immigration in the world, especially regarding human trafficking of women and


children. Regardless of international support, Arab countries in general have a reduced

power over migratory control, and the situation is far away from a solution. The Middle

East has also been characterized lately as another region that experiences the brain drain

phenomenon, having its students, doctors and other qualified professionals seeking

better opportunities in the United States and the European Union (BALDWIN-

EDWARS, 2005). Oil exporters, such as Saudi Arabia, seek to create social-economic

development strategies that can both draw high-qualified labor force and maintain its

best minds inside the country. Saudi Arabia also qualified as the world’s second

remittance source in 2005 (WB, 2008b), having a large deal of temporary migrants from

other Middle East countries working in the oil industry. This fact encouraged the

government to promote protection for foreign workers as the country seeks to make its

own labor force participate more in the economical process (PAKKIASAMY, 2004).

Sub-Saharan Africa migration represents the largest corridors without

border control and data arrangement in the world. Most of the migratory movement

involves transit between neighbor countries, where Africans seek improvement of

earnings, either temporarily or by settling permanently (SHAW, 2007). Even though

African countries added few restrictions on migratory movements, the States have

shown little power to impose such limits to immigration and emigration, making

undocumented migration a usual phenomenon in the region. With that, there has been

little legislation on immigrant protection in the countries as well. Uncontrolled

migration has also proven to encourage massive refugee installment in neighbor

countries (which can regionalize conflicts even further) and spread infectious diseases

through the continent, such as AIDS. On a positive aspect remittance has grown

throughout Sub-Saharan Africa, but there has been little governmental action to reduce

barriers to resource transferring and, most of the time, individuals end up recurring to

informal channels. Furthermore, States have tried subsidy programs, by rewarding

nationals that return to the countries, especially skilled emigrants that had its

productivity abroad improved, but the resources for this policy have been limited, and

the results have been mixed (SHAW, 2007).

5. QUESTIONS TO PONDER

1. How migration and remittances relate to the World Bank's scope?


2. Which measures could be taken with the intent of magnifying the benefits of

migration and remittances? On the other hand, how can the Board help to reduce the

negative impacts caused by migration and remittances? How can developing and

developed countries work together to solve controversial issues like the brain drain, the

impacts of migration over labor markets, etc.?

3. What should developing countries do, as sending countries, to support their

migrants and to benefit from emigration? Should actions be taken in sending countries

to dissuade emigration? If so, what kinds of policies should be adopted by sending

countries in this regard?

4. Which policies over migration could developed countries, as host countries,

adopt? Should these policies be more restrictive or more liberalizing ones? 6. What

actions should receiving countries take in order to guarantee the assimilation of

immigrants into the receiving society?

5. Receiving countries in general have stated that, regarding illegal

immigration, it is vital for the countries' national securities to invest in technology. Is

this the right approach to deal with illegal immigration? Should the World Bank support

investments directed to security programs? Which actions should be taken to minimize

immigration through illegal channels?

6. Which actions should be taken by the whole international community so as

to develop and improve better channels of information and data on the migration and

remittances issue?

7. How countries, together with international institutions, such as the World

Bank and the FMI, deal with emergencies in the international framework directly

involving migration's problems, e.g. 2010 Haiti earthquake?


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