Economic results of migration

One of the most important dimension of migrations’ effects. Economic results of migrations are the most relevant to development.

Brain drain vs. brain gain

Poor material conditions force lots of people to migrate every day. They leave their homes and cross the borders to migrate to new places with higher availability of work and higher wages, necessary to lead a decent and better life. Movements within labour market in the age of globalization are directed mostly abroad. Young people leave their countries of origin and migrate to host countries. These flows of labor result in two phenomena – brain drain and brain gain. The former takes place in country of origin, which experience loss of well-educated labor and intelligence, the latter is very beneficial and happens in host country or in the country of origin, when former migrants come back home. Thus people who gained education in their own countries exploit their skills and knowledge in host countries, contributing to its development.

For example (according to European Informer) immigrants from Poland who work in Great Britain produce 1% of its Gross domestic product. It is also expected that some of emigrants will improve their skills and gain experience abroad and in the end they will come back to their home countries, what would be a benefit for economics and development.

Flow of money and skills

Migration affects development since migrants generate the flows of capital back to their homelands in the form of remittances. It is very difficult to measure the amount of transferred and available data relate only to the cash transfers done through official channels. It is suspected that much more money is send through many unofficial channels or brought or send back home (also in the form of goods). International remittances are of the greatest importance for economy since internal remittances have no effect on the growth of the money within the country.

For example the amount of remittances received per year in Pakistan varies from USD 2 to 3 billion per year (1980s), constituting almost 9% of GDP; in Mexico it is to over USD 2 billion per year. According to [http://www.cedla.uva.nl/10_about/AnneliesZoomers(ENG).html Annelies Zoomers] it is estimated that people sending remittances are now reaching a number of 500 million people, what is almost 8% of the world population.

Flows of skills are also a form of remittances, obviously not possible to be measured but skills still constitute an important part of remittances.

Individual remittances use – advantages and disadvantages

It is important what people individually do with their remittances, since the way they spend the money can have both negative and positive effects. Only consumption purpose can lead to increase in import, decrease in foreign exchange and can be negative for development. Saving remittances and investing money is beneficial for development. The former can turn into positive process, when the considerable consumption intensified by higher income stimulates demand for local production and services, thus generating the employment.

Negative thing is that people receiving remittances can easily become dependent on migrants who earn money abroad. It can also happen, that economic flows don’t really lead to investments but more to stagnation (according to AIV document).

Entrepreneurs and Tourism

Some of the emigrants become entrepreneurs in the host countries, what fosters investments in the countries of origin. Keeping businesses abroad contributes to development of homeland. It’s stated that transnational enterprise not only improves development but also affects social and cultural spheres and is often inspired by these purposes.

Tourism is also a form of migration, but short-term, also contributing to development. In the country of origin travel agencies prosper, enabling people to travel abroad. Simultaneously countries which people travel to, make money serving tourists, through providing hotels, restaurants and many other attractions. Often prior immigrants start touristic entrepreneurships according to their own culture to attract people from their country.

Offshoring and outsourcing

Offshoring Big companies trying to reduce costs relocate their business processes partly or entirely to the countries where costs of operation are lower and low-paid labour is available. More often companies have main factories in Asian countries, where massive production for relatively small money is possible. Recently the main countries of destination for production offshoring is China and India. The new emerging destination is nowadays Philippines.

Outsourcing

It is similar process, although it means more relocation of internal production processes to another company, within the same country.