Economic results of migration
Encyclopedia
One of the most important dimension of migrations’ effects. Economic results of migrations are the most relevant to development.
s 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.
. 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 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.
Today, over 200 million people reside in a country that is not their birthplace. About 82 percent of migrants originate in developing countries, and their remittances, which amounted to an estimated $305 billion in 2008, represent an essential source of foreign exchange, as well as a major instrument in the fight against poverty. Migrants typically triple their real earnings by working overseas; and every 10 percent increase in per capita official remittances leads to a 3.5 percent decline in the share of people living in poverty.
The global financial crisis of 2008 has exposed migrant workers to new vulnerabilities. They are disproportionately young, unskilled, and employed in the worst-hit sectors, such as construction and manufacturing.
Flows of skills are also a form of remittances, obviously not possible to be measured but skills still constitute an important part of remittances.
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).
s 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.
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.
Brain drain vs. brain gain
Poor material conditions force lots of people to migrate every day. They leave their homes and cross the borderBorder
Borders define geographic boundaries of political entities or legal jurisdictions, such as governments, sovereign states, federated states and other subnational entities. Some borders—such as a state's internal administrative borders, or inter-state borders within the Schengen Area—are open and...
s 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
Globalization
Globalization refers to the increasingly global relationships of culture, people and economic activity. Most often, it refers to economics: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import...
are directed mostly abroad. Young people leave their countries of origin
Country of origin
Country of origin , is the country of manufacture, production, or growth where an article or product comes from...
and migrate to host countries. These flows of labor result in two phenomena – brain drain
Brain drain
Human capital flight, more commonly referred to as "brain drain", is the large-scale emigration of a large group of individuals with technical skills or knowledge. The reasons usually include two aspects which respectively come from countries and individuals...
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 remittancesRemittances
A remittance is a transfer of money by a foreign worker to his or her home country. Note that in 19th century usage a remittance man was someone exiled overseas and sent an allowance on condition that he not return home....
. 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 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.
Today, over 200 million people reside in a country that is not their birthplace. About 82 percent of migrants originate in developing countries, and their remittances, which amounted to an estimated $305 billion in 2008, represent an essential source of foreign exchange, as well as a major instrument in the fight against poverty. Migrants typically triple their real earnings by working overseas; and every 10 percent increase in per capita official remittances leads to a 3.5 percent decline in the share of people living in poverty.
The global financial crisis of 2008 has exposed migrant workers to new vulnerabilities. They are disproportionately young, unskilled, and employed in the worst-hit sectors, such as construction and manufacturing.
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 entrepreneurEntrepreneur
An entrepreneur is an owner or manager of a business enterprise who makes money through risk and initiative.The term was originally a loanword from French and was first defined by the Irish-French economist Richard Cantillon. Entrepreneur in English is a term applied to a person who is willing to...
s 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
Tourism
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...
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
OffshoringOffshoring
Offshoring describes the relocation by a company of a business process from one country to another—typically an operational process, such as manufacturing, or supporting processes, such as accounting. Even state governments employ 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
Outsourcing
Outsourcing is the process of contracting a business function to someone else.-Overview:The term outsourcing is used inconsistently but usually involves the contracting out of a business function - commonly one previously performed in-house - to an external provider...
It is similar process, although it means more relocation of internal production processes to another company, within the same country.