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Essay: Economic impact & socio-political consequences of voluntary migration on the source country

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  • Economic impact & socio-political consequences of voluntary migration on the source country
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Migration is a phenomenon that is fairly well known, but its implications are rarely well understood. The total migrant population has increased from 2.8% in 2000 to 3.4% in 2017, with the number of migrants worldwide increasing from 173 million to 258 million (“International Migration Report” 1-5). The effects of the outflow of people on their countries of origin are several. This paper primarily aims to outline the economic impact, while also exploring the socio-political consequences of voluntary migration on the source country.

First, it is important to understand the motivation behind migration. In recent years, developed nations have been faced with two population challenges: an aging demographic and a lack of labour in several sectors. To fulfill such needs, these nations have opened their borders. Since the people who tend to migrate are young students and job seekers, they help balance these issues in several of these countries. Along with the revision of migration policies, there exists an enticing promise of a better life. People from originating nations move in search of better job security, higher standards of living, better education and healthcare, amongst a variety of other factors (“International Migration Report”).

The sheer income gap between the developed and developing countries incentivizes citizens of poorer regions to emigrate. In fact, a wider gap creates more economic pressure for people to migrate (Collier). According to the United Nations Population Division, in 2017 the United States had the largest number of international migrants (19% of the global total) while India experienced maximum immigration (16.6 million people living abroad)(2-3). The GDP per capita in USA is $65 thousand, whereas in India the figure is a mere $2.19 thousand (IMF). The vast gap between these figures creates an undeniable incentive for migration. Undoubtedly, the costs of relocating are high, but the presence of migrant communities— diasporas— of one’s own nationality makes the transition easier.

While it is easy to anticipate the reasons for migration, its economic impact is harder to analyze.

The first significant area of impact is a phenomenon popularly termed as brain-drain. Brain drain is the emigration of highly trained, talented and skilled individuals in search for better opportunities (Srivastava). This issue concerns several low and middle-income countries, since it is these skilled people that raise the productivity— and in turn wages and standards of living— of the unskilled labour in a region. Better trained people are able to improve institutions and are more innovative. This innovation and efficiency leads to better practices for work and increases productivity of even the unskilled labour— thus, giving the economy a boost. The lack of such people— who are often better educated due to their initial financial positions— leads to the creation of a void at the top of the economic chain.

Historically, data and studies conducted indicate that countries can be affected in two ways. They can experience a net brain-drain— the direct effect of migration that obviously reduces the stock of talented individuals in an economy. In other situations, they can experience a positive flow of talent—a net brain-gain (Collier). Contingent on the size of the source country amongst other factors, an indirect effect is often one that augments talent. This is because migration leads to the creation of diasporas and also incentivizes the citizens to educate themselves well in order to capitalize on the opportunities and benefits presented by it. Not all people who equip themselves with skills necessarily migrate. Additionally, there is reverse brain-drain when students return after receiving education abroad. In some countries, over time, these indirect forces combine and lead to an economically and socially favorable phenomenon— brain gain. This can be observed in large developing countries such as India and China (Collier). The better equipped population tend to contribute to development and institutional changes that eventually lead to greater economic output. They have better ideas, more exposure and experience that they have gathered in their time abroad and can implement for the betterment of their home countries.

The chart below (Figure 1) helps understand the change in levels of education, over a period of 10 years across the world. As we can see, middle and low-income countries which typically experience the highest rates of migration have seen a significant increase in education, and hence, talent and skill levels. Thus, migration also acts a catalyst for talent augmentation.

While such a scenario makes a pressing case in favor of migration, this favorable outcome is not always achieved. Migration is a powerful concept, that can result in major set backs for source countries who are already in a disadvantageous position by creating a major impediment to their growth. Say, the initial outflow of talent from a poor country is large. These countries are unable to regain their original position through just talent building, because the gap left is far too wide (Collier). When the people left behind are those who could barely make ends meet, and proper education was a distant dream. In scenarios like these, the impact of brain drain is severely adverse. Thus, the impact of talent outflow is not straightforward and cannot be generalized across all nations. There are always two sides to the same coin, and for the purpose of this paper let them be the cases of Ireland and Uganda.

We can contrast the two different outcomes looking at two examples, Uganda and Ireland, in the same sector— healthcare. The World Health Organisation carried out case studies in both these countries and published the reports on their website. First, the case of Ireland, which experiences brain gain in this sector. The Irish medical workforce experienced a substantial outflow as those students and professionals trained within the country started seeking better opportunities and employment in other English speaking countries (“Ireland”) However, the government implemented a program— International Medical Graduate Training Initiative (IMGTI)— to attract and retain more foreign students, especially Pakistani and Sudanese Nationals. The program now also attracts professionals from eastern and central European countries. The number of students enrolled has increased from outside EU increased from 552 in 2014 to 1,095 in 2015. At the same time, about 6.4% doctors also exited the country. However, the brain-drain issue has not caused any major adverse effects on the Irish healthcare centre (“Ireland”). The Government must now strive to work towards retaining the talent they train.

The Ugandan case, unfortunately, has not been as remarkable. There exists a severe shortage of practitioners, especially in rural areas. Even though unemployment in the sector persists, professionals find these positions unattractive due to their conditions. During the period of 2010-2015, on average, 9% of these practitioners migrated out of Uganda (Omaswa et. Al.,4). More pressing is the fact that 89% of the migrants are young professionals under the age of 40. Over the course of the study, 192 professionals migrated, while only 71 returned to work or after studying abroad. These numbers could be especially worrying, and indicative of the lack of retention incentive in the country (Omaswa et. Al.,4).

Educated individuals are attracted to efficient and modern working conditions, in areas with progressive institutions and infrastructure. The absence of these exacerbates the problems associated with brain drain. Not only are less people immigrating to these countries, but their top talent is leaving with no incentive to come back.

The second area of impact is remittances —the sums of money, compensation and transfers that migrants send back to their families in their home countries. They form a large portion of the economic benefits offered by emigration. In 2017 alone, migrants had sent $466 billion back to their origin countries as remittances (World Bank). However, whether these remittances actually contribute to economic growth or not, is a separate matter altogether.

On international platforms, concerns have been raised regarding the viability of remittances as an alternative to employment within the country itself. Some argue, that even if migrants had chosen to stay back, they would be able to work and earn. This argument lays on an unsteady premise. In claiming so, we would have to assume that there are equal and sufficient opportunities present in the home countries of these migrants— the very lack of which entices people to relocate.

Undoubtedly, migration leads to a loss of productivity and decrease in the labour force in the source economy. But remittances offset these losses in the long run. Households receive adequate sums of money, which leads to an increase in both consumption expenditure and investments, which in turn fuels the economy. Above this, emigrants are more keen on investing in new real estate, institutions, technology and better infrastructure— education and healthcare facilities— in their home countries. Remittances also substantially increase the inflow of foreign exchange and help tide over periods of income shocks for families. When the financial troubles are greater, remittances increase, and tend to decrease by a lesser degree during times of financial stability. In this way, it acts as a form of insurance and encourages activities that are imperative for long term economic growth (Collier 211). These activities include entrepreneurial ventures and better human capital development, factors that are key to increase the GDP of a country in the long run (Ratha).

Trends over several years indicate that these foreign remittances actually exceed the sums received as portfolio investments and official development assistance, and are only second to foreign direct investments in low and middle income countries (Figure 2) (“Migration and Development Brief 30”). Remittances help maintain foreign exchange reserves in the country, which become vital for trade.

Despite its advantages, a highly pressing issue that accompanies these remittances is the pressure it puts on economic inequalities within the source country. Migration in itself is a large investment, that only those who are relatively better off can make. This in turn means that remittances only reach the already well to do households, which increases the gap between the rich and the poor. Development activities fueled by remittances do provide greater employment, but this is rarely sufficient to narrow an already widening gap (Ratha).

From the above discourse, stems certain socio-political consequences of migration. When obdurate, oppressive political regimes and poor economic conditions overlap, emigration means the loss of those people who are affluent and have the influential positions in society. On the other hand, when these migrants return after receiving foreign education or understanding the economic and social systems of their host countries, they have the power of knowledge and new ideas. They can put this to use in their own countries by taking on new ventures and roles in top positions of governance.

Over the course of the paper, the two most prominent economic impacts of migration have become more evident. Undoubtedly, it has fueled economic growth and opened several avenues for development. In several senses, it also creates a need for better infrastructure and institutions, enabling citizens to attain higher levels of education and access better amenities within their home countries. On the contrary, those countries in the most dire positions, and people grappling with grave poverty are the ones left worse off yet again. The question we are now faced with is— are current policy measures adequate in distributing the benefits of migration?

28.2.2019

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