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Critically examine the view that labour migration from poor/

developing countries could represent the opportunity for their

national economy

The issue of labour migration or the “brain drain” is not new,
however, it has regained its urgency under the context of increasing
globalisation and maturing economies. There are two aspects to labour
migration: remittances and migration of the skilled caused by the
globalization of education. We will examine both the aspects.
Labour migration can be of both types; intra country and inter
country. Labour migration is found to be rapidly increasing since 1990.
International migration is a potential way for vulnerable households to
change their standard of living, for better and has been the most
important economic factors to affect the relationship between the
developing and developed countries. It is seen that over 175 million–
roughly 3 percent of the world population people live outside their home
country. (Richard H. Adams, Jr., 2003:4).
Majority of migrants from developing countries, leave their home
countries for higher living standards. It is seen to be beneficial particularly
when the migrant is unemployed before migrating. Migration is that
important international economic aspect which unlike defence or
economic policies is not co-ordinated by an international organisation.
Migration has both direct and indirect effect on poverty Labour
migration can be both the cause and caused by poverty. Also it is true the
other way round. Poverty can be mitigated and exacerbated by labour
migration. It depends on the economy of the region on how the interplay
takes place. In some places like the Asian sub-continent migration can be
possible only for people with medium income level, in which scenario
migration helps to alleviate their monetary position. However in the
African Sub-Saharan region migration will be the only way of life to
survive. In which scenario, migration increases poverty. However our
discussion will be limited to the earlier part.
In the acceding countries themselves, the possible labour market
effects of accession are seen as ‘double-edged’. Acceding countries with
high levels of unemployment and low economic growth rates benefit by
the migration of their low skilled and unqualified workers.
This reduces their labour force and leaves fewer people without a
job. Also, the remittance payments of migrant workers back home have a
positive impact on income, consumption and demand. The emigration of
higher qualified people, however, may erode a country’s long-term
competitive position. It is agreed that such a ‘brain drain’ has negative
repercussions on the developmental process of a country (Commission of
the European Communities 2002, p. 15).
The whole issue of the brain drain has taken on a greater
significance in recent years in the context of the sustained and rapid
decline in fertility in the countries of the developed world, including those
in eastern Asia. Rapid rates of economic development based on high
technology industrialization but declining rates of growth in the indigenous
labour force fuel a demand for imported skilled labour.
Globalisation of education:
Education is at the heart of human capital formation. High
educational attainment is regarded as a positive influence factor on
migration. From a human capital perspective, it is assumed that higher
levels of education offer increased income returns for specific segments of
the labour market. It is also argued that higher levels of education provide
a greater ability to collect and process information, which lowers the risk
and increases the propensity of migration.
Bauer and Zimmermann (1999) develop the opposite hypothesis
based on an analysis of several international studies of migration. They
find an insignificant or even negative coefficient between levels of
education and propensity to migrate. This can be explained by the
prevalence of low-skilled labour markets for migrants in the destination
countries, which makes migration for high-skilled individuals less
While the achievement of universal primary education by 2015 is
one of the Millennium Development Goals, more advanced levels of
education are required for a country to move beyond development based
upon labour-intensive industrialization towards more capital-intensive
activities. The models of education that are adopted by developing
countries tend to follow those of the developed countries of the west. The
curricula used may perhaps not be those most appropriate for rural
societies, even at basic primary levels of schooling, and those pursuing
education beyond those levels can most profitably use the fruits of their
learning in the urban sector. A virtual universal finding of studies of
internal migration in 15 developing countries is that rural migrants to
urban areas have higher levels of education compared with those in the
areas from which they come (Skeldon 1990).
An issue quite separate from the types of curricula introduced is the
perceived quality of teaching. Concerns about quality of teaching exist not
just in rural areas but throughout much of the developing world in general
and this perception can be conceptualized in a hierarchical manner. Rural
parents feel that the quality of teaching is better in the town rather than
the village, those in provincial towns see schools in capital cities as of a
higher standard, and those in capital cities look to institutions overseas to
prepare their children for life in a globalizing economy. Irrespective of
whether this perception of educational standard is correct, two critical
factors enter into the equation: availability of the service and cost. Good
secondary schools are rarely available in isolated, rural parts of
developing countries and the tertiary institutions that are best endowed
tend to be located overseas. Even where education is nominally provided
by the state or through scholarships, costs are involved where a
movement to a school or university away from the home area is involved.
As in the case of accessibility, these costs rise in a hierarchical manner
through the levels of education, and children leaving their communities to
pursue their education tend to come from the relatively more advantaged
groups at each level. Education has become a multi-million dollar migrant
industry, particularly at the global level. (Skeldon, 2005)
The UNESCO (2005) database provides information on the bilateral
stocks of students in higher levels of tertiary education at most
destinations and allows some insight into the principal sources of students
in the global system. Of the five countries that dominate the destinations
for students to pursue tertiary education: It can be seen that rapid rise in
the numbers of students in Australia in the most recent years for which
data are available surely cannot be disassociated from that country's
policy of offering graduates permanent residence status upon graduation
(see Hugo 2005).
Also, migration of students is seen by some observers as a form of
migration of young and qualified labour. In several receiving countries, it
has been easier to switch from a student to worker status than to migrate
as fully qualified employee (SOPEMI, 2001; Kofman, 2003).
Although the developed countries clearly benefit from the
movement of the skilled, it would be difficult to argue that the reason for
their continuing economic success is predicated upon the importation of
skilled migrants from overseas. Equally, it is difficult to conclude that the
migration of students necessarily prejudices the development of the
countries of origin. The reason being the return of a proportion of those
students as skilled returnees has surely contributed to the sustained
economic growth in that region. Interestingly enough the outflow of skilled
migrants may benefit countries of origin in ways other than through the
later return of some of those migrants with enhanced skills. Stark (2003),
in an elegant model, argues that in a closed economy, or a small open
economy with no migration, there is a tendency to under-invest in human
capital. This tendency is reduced when emigration becomes an option and,
despite some losses through migration, the overall average level of human
capital in the economy rises.
What does appear clear, however, is that investments are made in
human capital before the option of international migration becomes
available and unemployment among the educated is an issue in some
economies. That is, economies in developing countries may have difficulty
absorbing the human capital made available to it. Migration, in this case,
becomes an economic safety valve (Skeldon, 2005). If the trained
manpower does not secure employment in the country it stands as a lost
cause to the economy anyway, but the migration at least brings benefit to
the individual migrants and their families. However, the economy, too, can
gain if the skilled migrants send back remittances or return at a later
stage. Although this is the theme we will get back to in the following
section, one thing is apparently clear is that the trade-off between gain of
the developed country and the loss of developing country cannot be
quantified as it is.

Potential Economic Gains and Losses From Migration

Several simulation exercises indicate that the total global income
gains from even small increments to labor mobility could be quite
enormous. Walmsley and Winters (2003), for instance, estimate that a 3
percent expansion of global migration could generate a larger increase in
world incomes than a complete liberalization of all trade flows.
The main drivers for these massive simulated gains are the gaps in
earnings between the poor and rich nations. When the gap in earnings of
unskilled workers between some of the poorer and richer nations exceeds
twentyfold, as presumed in these exercises, transfer from the low to high
earnings settings potentially offers huge gains (Robert E. B. Lucas, 2008).
In the process of these simulated changes, the migrants themselves are,
by far, the largest winners. The net potential gains to migrants entering
the industrialized countries are extremely high.
The initial impact of migrants’ arrival upon the host country’s economy
depends upon a number of circumstances. In contexts where wages are
relatively flexible, such as the United States, there is some evidence that the
added supply of labor depresses wages of workers within the same broad
education level (Borjas 2003). Places where wages are less flexible, such as in
much of Europe, the impact tends to be revealed in higher unemployment
(Münz et al. 2006). Yet, in both cases, the magnitudes of such impacts appear
to be relatively small.
However, in general, remittances tend to be seen by many
governments as the dominant benefit to the home country from labor
migration abroad. Reported remittances to the developing regions have
grown rapidly, although it is not clear how much of this is simply a growth in
reporting. In any case, international remittances to the developing regions are
now the largest source of financial inflow after direct foreign investment,
having surpassed both debt flows and official development assistance (Robert
E. B. Lucas, 2008). For several of the major emigration countries, remittances
exceed merchandise export earnings. Remittances also offer a critical source
of support in times of crisis and tend to increase during times of economic
downturn at home, in contrast to other financial flows (World Bank 2006).
Remittances provide an important source of income and of foreign exchange.
Whether remittances stimulate domestic investments, hence economic
growth is disputed (Chami et al. 2003; Catrinescu et al. 2007). Some of the
evidence points to substantial spending on housing and education
investments out of remittance receipts (Edwards and Ureta 2003).
Another interesting thing that develops is that there are instances
where both international migration and household incomes are rising.
Researchers have related this peculiarity to the issue of “incentives versus
constraints”. To restate, it may be argued that it is the very poorest in
society who may have the incentive to emigrate as, by working abroad,
they can earn more money in comparison with what they were receiving
at home. Hence on the face of it, the issue of incentive-led migration
seems logical; at least from the economic point of view however, there
could be other non-economic factors in the form of constraints which may
hinder such migration. For example, some poor migrant workers may not
have enough personal savings, or may be unable to borrow large sums of
money from the formal banking system to pay recruiting agents. Apart
from cost factors, there are also risk factors which may prevent migration.
Some poor migrant workers could unwillingly fall victim to deceitful
smugglers, some could be detained at the border, while others may be
unable to remit money despite having successfully migrated. Faced with
these risks, some poor potential migrant workers may be unwilling to
In a nutshell, according to UN Economic and Social Commission
Research related to the impact of international migration on poverty
reduction and inequality is mixed. Some argue that remittance flows lead
to higher inequality, while others think that it is an income equalizer. Due
to the high cost and risks associated with international migration,
“pioneer” migrants generally came from middle or upper-middle income
categories that could not only afford the cost but also bear the risks
associated with migration. This, of course, could promote inequality and
could, perhaps, have little or no effect on poverty reduction. However, if
networks and contacts provide more poor workers with the opportunity to
participate in international migration, then the impact of remittances on
income inequality would be higher and, at the same time, it would have a
dampening effect on poverty

International labour migration provides both challenges and
opportunities for countries as they need to develop their economies. On
the basis of conceptual discussions as well as empirical evidence, at both
the macro and country levels, it appears that international migration could
influence economic development and poverty reduction in developing
countries In fact, despite a drain on human resources due to the departure
of some professional and skilled workers from developing countries,
international migration seems to have become an integral part of
economic growth and a source of income for poor workers. Once
international migration takes off, it seems to take on a life of its own and is
very difficult to stop. In order to convert these competing challenges
created by international migration into opportunities, policymakers and
the international community need to take proactive measures. Through
collaborative initiatives, international migration could become a substitute
for sound development policies.
Remittances which account for a major source of foreign exchange
and income, as well as a larger share of the balance of payments than
trade, in many developing countries. However, transferring money home
is sometimes complicated and when it is possible, the cost is as high as 15
to 20 per cent of the value remitted. Migrant workers therefore resort to
informal channels, which can not only be risky but could entirely bypass a
country’s formal banking sector. The adoption of policies by Governments
to facilitate access to banks by remittance-receiving households will be
essential in reducing the transaction costs of international migration. Also,
an important policy intervention in reducing remittance transaction costs
could be to find ways and means by policymakers to use remittance
money in enhancing welfare and stimulating investments in a migrants’
home base. This policy action, called leveraging remittances.
In terms of education, in order to ensure that migrants have sought-
after skills and for them to obtain technical or professional work,
appropriate training to improve human resources should be provided. In
addition, it must be recognized that the exodus of relatively small
numbers of skilled from small, poor economies can cause a substantial
loss from the total pool of the skilled in those economies. More generally,
the highly skilled in many developing countries may not be able to be
productively employed locally, leaving emigration as the only rational
alternative if their skills are to be fully utilized.
However we can say that there is a persistence of globalizing forces
and also that the most effective way towards managing the flows of the
highly skilled is not restriction or control but improvement in training that
is likely to lead to increased movement of the skilled, but an increased
movement that promotes increased circulation of brains that brings some
skilled nationals back, as well as allowing other nationals with similar
Hence the migration of labour, in a nutshell, should be viewed as
one which is providing opportunities depending on the way we see it.


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