migration and remittance

7/30/2019 migration and remittance

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Global Prospects for Migration andRemittances in 2012: Implications for Asia

Dilip Ratha

World Bank

ADBI-OECD Roundtable on Labor Migration in Asia

Tokyo, Japan

January 18-20, 2012

The views expressed in this presentation are the views of the author and do not necessarily reflectthe views or policies of the Asian Development Bank Institute (ADBI), the Asian Development Bank(ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee theaccuracy of the data included in this paper and accepts no responsibility for any consequences oftheir use. Terminology used may not necessarily be consistent with ADB official terms.


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Outline

A. Stylized facts on migration and remittances

B. Development implications of remittances

C. Global prospects for remittance flows

D. Policy implications/Innovative financing

mechanisms leveraging on migration andremittances


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A. Stylized Facts on global migration

y Only 3% of world population or 215 million people

are international migrants (97% are not)

y Economic migrants account for 93% of global

migrant stock. Economic migration is set to

increase in future

y South-South migration is larger than South-North

migration


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South-South migration is larger than migration

from developing countries to high-income

OECD countries

South44%

High-incomenon-OECD

14%

High-income

OECD

42%

Source:Migration and Remittances Factbook 2011

Destination of migrants from the South


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More than half of migrants from Asia are in high-

income countries, but many are within the region

Within Asia

22%

High-income

non-OECD

31%

High-incomeOECD

26%

Other

developing21%


Destination of migrants from Asian countries

Stock of emigrants: 59 million or 1.6% of Asias population in 2010


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Migration and remittances in Asia

y Asian countries have 59 million international

emigrants or 1/3rd of all emigrants from developing

countries

y Officially recorded remittance flows to Asia are

estimated to have reached $200 billion in 2011

y Asia accounts for 62% of all remittance flows to

developing countries in 2011


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3.3

2.6

2.22.2

1.7

1.7

1.7

1.7

1.5

1.4

Bangladesh-India

Kazakhstan-Russia

China-Hong Kong SAR

India-UAE

China-United States

Philippines-United States

Afghanistan-Iran

India-United States

India-Saudi Arabia

Indonesia-Malaysia

Top migration corridors within and from Asia

Migrant stock(millions), 2010


Note: Migration corridor with at least one Asian country


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43

12 117 7 7 7 7 6 5

US

Russ

ia

Germ

any

Saud

iAra

bia

Cana

da UK

Spain

Fran

ce

Austra

liaIn

dia

Top migrant-destination countries

87

72 70 6964 63 62

57 55 55

Qatar

Mona

coUAE

Kuwa

it

Ando

rra

Caym

anIs

N.Marian

aIs.

Virgin

Is,US

Macao

,China

Isleo

fMan

Immigrant stock,millions, 2010

Immigrants as % ofpopulation, 2010



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5857

24 23

12 12 119 8 8

Indi

a

Chin

a

Mexi

co

Philip

pine

s

Pakis

tan

Bang

lades

h

Nige

ria

Vietna

mEg

ypt

Leba

non

Top remittance recipients

3129

2523

21 20 20 2017

16

Tajikist

an

Lesoth

o

Samoa

Moldov

a

K

yrgyzR

ep.

Nepal

Tong

a

Leba

non

Kosovo

ElSalv

ador

($billions), 2011e As % of GDP, 2010

Source:Migration and Development Brief 17

Note: ADB member countries in Orange. Includes only developing countries.


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0

100

200

300

400

500

600

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012f

2014f

$ billions

After a modest decline in 2009, remittances

have grown steadily, to reach $351 bn. in 2011

Source: Migration and Development Brief 17


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B. Development implications of remittances

y Evidence from household surveys shows that

remittances reduce poverty

y Remittances also finance education and health

expenditures, and ease credit constraints on small

businesses

y Remittances act as insurance against adverse

shocks during crisis and natural disasters

y Remittances contribute to improving current

account sustainability and creditworthiness


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Downside of remittances

y Large remittance flows may lead to currency

appreciation and adverse effects on exports; but

sterilization of inflows may not be an appropriatepolicy response

y Remittances may create dependency

y Remittance channels may be misused for money

laundering and financing of terror


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C. Global prospects for remittance flows

y Flows to developing countries shrank by 5.2% to $307

billion in 2009 but quickly recovered in 2010 and grew to

$351 billion in 2011

y Remittances remained resilient during the crisis relative to

FDI (-37% during 2008-09) and private debt & portfolio

equity flows (-73% during 2007-09)

y Remittance flows to developing Asia were flat in 2009

during the crisis (after double digit growth), and grewrobustly by 9.1% to reach $200 billion in 2011


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Resilience of remittances across all regions

-20%

0%

20%

40%

2008

2009

2010

2011

e

2012

f

2013

f

East Asia and

PacificEurope andCentral Asia

Latin America and

CaribbeanMiddle-East andNorth Africa

South Asia

Sub-SaharanAfrica

Percent

Source: Migration and Development Brief 17


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Remittance flows to Asia slowed in 2009; expected to

recover at a modest pace in 2012-14

0%

10%

20%

30%

2006

2007

2008

2009

2010

2011

e20

12f

2013

f

2014

f

Growth

2010: 10.3%2011e: 9.1%

2012f: 7.6%

Note: These figures are only for developing country members of ADB.


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Remittance flows to developing countries

$ billion 2010 2011e 2012f 2013f 2014f

Developing countries 325 351 377 406 441East Asia and Pacific 94 101 109 117 127

Europe and Central Asia 36 40 44 48 53Latin America and Caribbean 57 61 66 71 77Middle-East and North Africa 35 36 37 39 42South Asia 82 90 97 105 114

Sub-Saharan Africa 21 23 24 26 28Growth rate (%)

Developing countries 6.0% 8.0% 7.3% 7.9% 8.4%East Asia and Pacific

10.2% 7.6% 7.3% 8.0% 8.7%Europe and Central Asia -0.1% 11.0% 8.8% 10.1% 11.4%Latin America and Caribbean 1.2% 7.0% 7.6% 7.9% 8.1%Middle-East and North Africa 3.3% 2.6% 5.0% 5.3% 5.5%

South Asia 9.5% 10.1% 7.4% 7.9% 8.4%Sub-Saharan Africa 4.5% 7.4% 6.3% 6.8% 7.3%


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Sources of data

y Our remittances data comes from:y Central Bank websites

y IMF Balance of Payments

y World Bank country offices

y Survey of central banks

y

Media reports

y Our migration data comes from:

y

Census websites of countries

y US Census Library

y World Bank country offices

y UN Global Migration Database

y OECDs International Migration Database


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Methodology of remittance projections (1)

y Forecast methodology based on bilateral migrant stocks(Mij)

and how changes in their income (y) may affect remittances

y

Remittances (Rij) received by country i from country j:

y Forecast of remittance outflows from country j:

Ij: remittance intensity (ratio of remittance outflows of country j to its GDP)

j: income elasticity of migrant remittances

y Forecast of remittance inflows to country i:

rij: share of remittances in country i coming from country j

Sources: Mohapatra and Ratha (2010), Ratha and Shaw (2007)


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Methodology of remittance projections (3)

y Country economists could also use a regression-basedforecast tool:

Growth variables:

Log variables:

REM/Pop: remittances per capitaHOMEGDP: home country real GDP per capita

HOSTGDP: weighted average of host countries real GDP per capita

REER: real effective exchange rate

INTR: interest rate differential between home and host countries

Source: Estimating Remittance Trends in South Asia (World Bank 2010)


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Oil prices continue to provide a cushion for

remittances to Asia

0

2

4

6

8

2004

Q4

2005

Q4

2006

Q4

2007

Q4

2008

Q4

2009

Q4

2010

Q4

2011

Q4

0

20

40

60

80

100

120

140

$ billions

Remittance outflows from

Russia (left scale)

Crude oil price

(right scale)

$/barrel

Source: IMF Balance of Payments and Development Prospects Group, World Bank.


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Exchange rate depreciation has created additional

incentives to send remittances

90

95

100

105

110

Jul-1

0

Sep-10

Nov-10

Jan-11

Mar

-11

May

-11

Jul-1

1

Sep-11

Nov-11

Mexican Peso

Bangladeshi Taka

Local currency/US$

(July 2010 = 100 )

Indian Rupee

Cost of sending remittances to developing


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Cost of sending remittances to developing

regions is high

$24.8

$19.6$17.4

$16.3$15.4

$12.3

SSA

EAP

ECA*

MNA LA

C

South

Asia

ECA excludes Russian Federation; Source: World Bank Remittances Prices Worldwide database (Sept.2011)

Average cost of sending $200 to developing regions


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Remittance costs are falling

7.0

8.0

9.0

10.0

2008 Q12009

Q32009

Q12010

Q32010

Q12011

Q32011

Percent

Simple average

Weighted average

Costs still high over 10% - in Sub-Saharan Africa

Data on market size a key driver of market competition


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Risks to the outlook

y Global economic crisis in the US and Europe

y Anti-immigration policies in other destination

countries

y Uncertain currency and oil price movements

Remittances are resilient during economic


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Remittances are resilient during economic

downturns in host countries

y Remittances are sent by the stock (cumulated flows) of

migrants

y Remittances are a small part of migrants incomes that can

be cushioned against income shocks by migrants

y Duration of migration may increase in response to tighterborder controls

y Safe haven factor or home-bias -- returnees will take

back accumulated savings

y Sectoral shifts and fiscal stimulus packages may help

some migrants


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Longer term issues/trends

y Rising restrictions on new immigration

y But long-term infrastructure plans in the Gulf canincrease demand for migrants from South and East

Asia in the medium term (e.g. Qatars World Cup

win fuel new construction)

y Application of mobile phone technology remains

limited to domestic remittances because of AML-CFT concerns

y More awareness of potential for leveragingremittances and mobilizing diaspora wealth


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D. Policy implications

1. The international remittances agenda


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International

RemittancesAgenda

1. Monitoring, analysis, projection- Size, corridors, channels

- Counter-cyclicality- Effects on poverty, education, health,

investmen- Policy (costs, competition, exchange

controls)

2. Retail payment systems- Payment platforms/instruments- Regulation (clearing and settlement, capital

adequacy, exchange controls, disclosure, cross-border arbitration)

- Anti-money laundering/Countering financing ofterrorism (AML/CFT)

3. Financial access- Deposit and saving products- Loan products (mortgages,

consumer loans,microfinance)- Credit history for MFI clients- Insurance products

4. Capital market access- Private banks and

corporations

(securitization)- Governments (diaspora

bonds)- Sovereign credit rating

Th l h f h di b bili d


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The wealth of the diaspora can be mobilized

through diaspora bonds

Diaspora size

(millions)

Estimated savings

($ billions, 2009)

Developing countries 161.5 397.5

East Asia & Pacific 21.7 83.9

Europe & Central Asia 43.0 72.9Latin America & Caribbean 30.2 116.0

Middle East & North Africa 18.0 41.2

Sub-Saharan Africa 21.8 30.4

South Asia 26.7 53.2

Source:Ratha and Mohapatra 2011.

The World Bank has set up a Task Force on Diaspora Bonds


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Global Knowledge Partnership on

Migration and Development


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Objectives

y Provide an open, multidisciplinary platform to

debate, discuss and exchange knowledge on

migration issues

y Generate a menu of policy choices based on

evidence and peer-reviewy Assist sending and receiving countries in

implementing a few pilot policy operations and

capacity building efforts to evaluate andmainstream a few policy choices

Thematic areas


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Thematic areas

1. Data on migration and remittances flows

2. Skilled labor migration

3. Unskilled labor migration

4.Integration issues in host countries

5. Policy coherence

6. Migrant rights and social aspects of migration

7. Demographic changes and migration8. Remittances including access to finance & capital markets

9. Mobilizing diaspora resources

10.Climate change and migration11.Rural-urban migration and urbanization

Significant gaps in knowledge, institutional capacity and

coordination highlight the need for an open knowledgeplatform as a global public good


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Proposed structure

Steering Committee

Thematic working groups

Volunteer researchers

Secretariat Donor Community

10

multidisciplinaryexperts

68experts,

withaWorld

BankorGMG

staffaschairor

cochair

WorldBankMigration

andRemittancesUnit,

Policyoutreach

officers

(3),Adminandweb

staff(3)


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External partnerships

y International and regional agencies

Global Forum on Migration and Development,

Global Migration Group, World Economic Forum,

UN agencies, AU, EC, IOM, ADB, AfDB, IDB,

G20

y Research networks

Migrating out of Poverty, Africa Economic

Research Consortium, CEMLA, other researchinstitutes, universities, and think-tanks

y Civil Society


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Outputs of Migration Knowledge Platform

y Analytical research products

y Operational toolkits, fact books

y Web-based anthologies, archives, blogs

y Best practices: A menu of policy choices for the policy

makers

y Few pilot projects and capacity building activities


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Data and other resources are available at

www.worldbank.org/migration
http://www.worldbank.org/migrationhttp://www.worldbank.org/migration

migration and remittance

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