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Helping individuals helps development – think tank

18 February 20160 comments

New insights into the contributions migration makes to development and the global economy have been highlighted in a report by the economic think-tank The Adam Smith Institute.

The report says the developing world is benefiting greatly from migration though remittances, temporary work permits and exposure to robust national institutions.

Think-tank The Adam Smith Institute reveals new report highlighting that the developing world benefits greatly from migration

Think-tank The Adam Smith Institute reveals new report highlighting that the developing world benefits greatly from migration

The report says that migration benefits not only migrants but also those left behind as well as the development of the third world, through the remittances sent from people living abroad which are now worth more than twice as much as foreign aid.

“Remittances significantly ameliorate poverty – reducing it in Uganda by 11 per cent – and economic growth; provide security in economic and political crises, as well as improve health and education outcomes,” the report says.

“The benefits the migrants themselves can derive from moving from a poor to a rich country cannot be understated. The average American has 200 times the lifetime income of the average person in the Congo, someone in Honduras is 229 times more likely to be murdered than someone in Japan,” it says.

“Poor migrants can potentially increase their income, adjusted for purchasing power, by 20 to 30 times by moving to a developed country. On average, Peruvian immigrants in the United States have 3.8 times the income of those with a similar level of education in Peru.”

The report, by leading Swedish economist Fredrik Segerfeldt is among the most fiercely debated areas of national and global policy with more 20,000 people having drowned in the Mediterranean in the last two decades trying to cross borders to a better life.

But Dr Segerfeldt says what is often ignored in the debate is the contribution migration can bring to development.

Most differences in living standards are simply removed when someone moves from a poor country to a richer one and that strong national institutions are important for economic development, the report says.

“On the whole, development scholars agree that it is a country’s institutions – particularly secure property rights and the rule of law – that determine a country’s level of income, not its people,” it says.

“Because of this, if a Haitian and a German move to the United States – a country with strong institutions – despite the vast differences in income between the countries, most of the difference in average income is removed.”

The report says that the notion of a ‘brain drain’ leads people to assume that migration can only be detrimental to the home countries of migrants.

Dr Segerfeldt says this is not borne out in reality. He says data from 127 developing countries has led of a research consensus conclude that the prospect of migration often encourages residents to invest in education, some of whom ultimately choose to stay.

In conclusion, the report says that development scholars and politicians should shift from a ‘transformative’ to a ‘marginal’ approach, and thus move from trying to save entire countries through foreign aid programmes to helping their inhabitants by letting them move to stronger institutional environments.

“In the fashion of the UN target of 0.7 per cent of GNI for foreign aid, we should adopt a volume target for migration from developing to developed countries,” the report says.

“Even a cautious target of increasing such immigration by three per cent of the current workforce over a decade would, according to the World Bank, bring the global poor a welfare benefit of $US257 billion.

“A programme of temporary work permits and restrictions on access to welfare benefits for migrants might make such an increase in migration more politically palatable, while still delivering significant benefits to migrants and their home countries,” it says.


Laurie Nowell
AMES Australia Senior Journalist