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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%
Source:Migration and Remittances Factbook 2011
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 $200 billion in 2011
y Asia accounts for 62% of all remittance flows to
developing countries in 2011
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3.3
2.6
2.22.2
1.7
1.7
1.7
1.7
1.5
1.4
Bangladesh-India
Kazakhstan-Russia
China-Hong Kong SAR
India-UAE
China-United States
Philippines-United States
Afghanistan-Iran
India-United States
India-Saudi Arabia
Indonesia-Malaysia
Top migration corridors within and from Asia
Migrant stock(millions), 2010
Source:Migration and Remittances Factbook 2011
Note: Migration corridor with at least one Asian country
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43
12 117 7 7 7 7 6 5
US
Russ
ia
Germ
any
Saud
iAra
bia
Cana
da UK
Spain
Fran
ce
Austra
liaIn
dia
Top migrant-destination countries
87
72 70 6964 63 62
57 55 55
Qatar
Mona
coUAE
Kuwa
it
Ando
rra
Caym
anIs
N.Marian
aIs.
Virgin
Is,US
Macao
,China
Isleo
fMan
Immigrant stock,millions, 2010
Immigrants as % ofpopulation, 2010
Source:Migration and Remittances Factbook 2011
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5857
24 23
12 12 119 8 8
Indi
a
Chin
a
Mexi
co
Philip
pine
s
Pakis
tan
Bang
lades
h
Nige
ria
Vietna
mEg
ypt
Leba
non
Top remittance recipients
3129
2523
21 20 20 2017
16
Tajikist
an
Lesoth
o
Samoa
Moldov
a
K
yrgyzR
ep.
Nepal
Tong
a
Leba
non
Kosovo
ElSalv
ador
($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