A research agenda
Today an estimated 215 million people live outside their country of birth, and more than half of these migrants come from developing countries. In 2010, migrants sent more than $ 325 billion home. Over the past years, remittances have not only been growing in absolute terms but also relative to other sources of external development finance. The developmental relevance of migration is undeniable when one considers that remittances are equivalent to about 219 % of total official development assistance and about a quarter of global foreign direct investments.
At the individual level, the decision to migrate can increase a person’s lifetime welfare substantially. Clemens et al. (2008) show that moving to the USA can boost a 35-year old skilled worker’s income by up to 400 %. It is obvious, therefore, that migration can serve development, but many issues are not fully understood yet. I will focus on two important methodological issues first and then turn to conceptual aspects that have not received enough attention so far.
Methodologically, there are two major challenges. The first concerns the accurate measurement of migration and remittance flows. There is a lack of reliable and publicly available statistics. Moreover, different institutions use different definitions, so one cannot compare their data.
Accordingly, most studies rely on survey data. Such data, however, is likely to be distorted too. For instance, migrants are known to underestimate the true volume of remittances. Based on governmental and survey data from India, Akee and Kapur (2012) found large discrepancies between self-reported and actual bank deposits. The latter were almost twice as large as what households had indicated. In this context it is also important to acknowledge the difficulties research faces with regard to the analysis of illegal migration. Not least because of serious measurement problems, this topic remains under-researched. Illegal migration is an important phenomenon however, and may undermine some of the positive impacts of legal migration.
The second challenge concerns causal relations. To translate research into viable policies, one needs to understand what impact results from what cause. Migrants who opt to go abroad tend to differ from the general population in various ways. They are often particularly able, motivated and self-confident. Accordingly, it is impossible to generalise their experience. According to McKenzie et al. (2010), neglecting this issue will lead to massively distorted estimates.
Even robust quantifications of the mechanisms at work do not directly translate into policies. Policymakers need options to choose from in different contexts in order to maximise the benefits of migration. Only few studies have so far reliably assessed the impact of public programmes that were meant to deal with migration.
Two studies stand out due to their randomised intervention design and their rigorous analysis. Doi et al. (2012) evaluated the effectiveness of financial literacy programmes in Indonesia. They found that training migrants and their family members in these matters increased their propensity to save remittances as well as improve their budgeting. Training, however, did not affect the total amount of remittances. It mattered, however, who was trained: the migrant, the household or both. The strongest effects were observed when both sides were trained.
The second example was provided by Ashraf et al. (2011). In a field experiment, the authors offered El Salvadorian migrants bank accounts in their country of origin with a varying degree of control over the remittances accumulated in these accounts. The migrants who received the greatest degree of monitoring and control over their accounts had significantly higher savings than those with a lower ability to control their accounts. These results call for the innovation of financial services to maximise the development effect of remittances, and they highlight the need to go beyond policymakers’ current focus on channelling remittances into formal bank accounts.
More than remittances
Conceptually, the migration debate tends to emphasise remittances. Monetary flows are indeed the most tangible aspect of international migration. But there are other relevant dimensions and some rather subtle effects.
One of them is the transmission of knowledge, norms and values – a phenomenon that has been called “social remittances”. For instance, there can be a transfer of political norms that helps to improve political institutions and change voting behaviours. Spillimbergo (2009) showed that foreign-educated individuals tend to promote democracy in their countries of origin.
However, the transmission of norms and values is not limited to the political sphere. It also concerns social norms. Migrants’ families, even in the country of origin, often become more interested in education and more willing to invest in it (Böhme 2012). They also tend to have fewer children (Beine et al. 2009). By and large, causality in these matters is still under-researched and deserves more attention.
Research has also acknowledged the importance of another conceptual aspect without which neither monetary nor social remittances would take place: diasporas. Projects and programmes that try to answer the open question on how to harness diasporas for the development process apart from being a source of remittances are of high relevance. There is some initial evidence that diasporas facilitate foreign direct investments and increase trade (an example is Javorcik et al. 2011).
However, we are still in the dark about such important questions as knowledge and cultural transfers and the political economy implications of diasporas. This is especially important as the dynamism of diaspora engagement seems to be linked to ideas of patriotism and even nationalism. Further research in this direction is essential.
Circular migration is a related and equally under-researched issue. While governments increasingly implement programmes to facilitate the return of migrants to their country of origin, it remains an open question whether such programmes really achieve the desired development outcomes by increasing welfare. It is also unclear what impact bureaucratic obstacles have. Another challenge is to understand the relevance of eligibility to services of nationally organised welfare states. Typically, legal migrants enjoy better social protection in the country they chose to live in than in their country of origin.
Another conceptual issue is the geographic focus of the current discussion. While the migration debate focuses often on people moving from the south to the north we should not forget that almost two thirds of global migration is attributable to migration between developing countries (“south-south migration”). Moreover, there is massive migration within developing countries.
Flows of migrants within the global south hold an enormous potential, as Bryan et al. (2012) argue in the case of Bangladesh. The authors found that individuals who were supported financially by a non-governmental organisation with the equivalent of six to eight dollars to migrate within Bangladesh on average earned $ 110 more in the lean season than those who stayed in their villages. Thanks to financial support from the migrant, their families were able to increase their calorie intake by 550 to 700 calories per head and day on average