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date: 19 March 2018

Migration and Development

Summary and Keywords

There are three factors that persuade a migrant to cross borders: demand-pull in destination areas, supply-push in origin areas, and network factors that connect them. On the basis of this demand-pull, supply-push, and network framework, a distinction can be made between economic migrants who are encouraged to migrate because of a demand for their labor abroad and noneconomic migrants who cross national borders to seek refuge or to join family members living abroad. Many economists argue that trade and migration have similar effects on sending and receiving countries. However, there is no solid evidence showing that more migration accelerates economic development in migrant-sending countries. The effects of international migration on development are often grouped in the 3-R channels of recruitment, remittances, and returns, each of which can operate in ways that speed up or slow down economic development. Recruitment refers to who goes abroad, remittances are the amount of the money earned by migrants abroad that is sent home, and returns focus on what migrants do after a period of employment abroad. Majority of industrial countries have national laws that require all workers to receive minimum wages and migrants to receive the same wages and benefits as local workers. From the point of view of some developing countries, minimum and equal wages are a form of protectionism aimed at limiting the number of migrant service providers. A major challenge of the twenty-first century is how to resolve this trade-off between migrant numbers and migrant rights.

Keywords: economic migrants, noneconomic migrants, trade, international migration, economic development, recruitment, remittances, minimum wage, migrant numbers, migrant rights


This entry reviews the impacts of international migration on the economic development of migrant-sending countries and the effects of development on migration from poorer to richer countries. Economic development, measured by average per capita economic output or income, is generally associated with reduced out-migration. However, there is an uncertain link between more out-migration from and remittances to labor-sending countries and faster economic development as measured by per capita incomes, and an equally unclear relationship between policies meant to accelerate development, such as freer trade and investment, and the outflow of migrants (Papademetriou and Martin 1991; Skeldon 1997; Lucas 2005).

International migration, crossing national borders and staying abroad a year or more, involved 191 million people in 2005, 3 percent of the global population (UN Population Division 2006). About two-thirds of international migrants have left developing countries, and half of these developing country migrants moved to industrial countries; the other half moved to other developing countries.

Economic development is the process that allows poorer countries to become richer, and is most often measured by average per capita national income, recognizing that such measures are a crude basis for comparisons. In 2005, developing countries were classified by the World Bank as low income if their per capita incomes were less than $905, so that $906 to $11,115 was defined as middle-income and the 25 high-income or developed countries had per capita incomes above $11,115. Today, about 170 of the world’s 200 countries are considered developing, meaning they had average per capita incomes of less than $11,100 in 2005 (World Bank 2008). Economic development became a global priority after World War II, when many ex-colonies became independent nations and capitalist and communist nations competed to offer aid to accelerate development during the Cold War.

This entry focuses on two questions. First, does migration from developing to industrial countries speed or slow economic development in the migrants’ countries of origin? Both migration and economic development have been increasing unevenly over the past quarter century, and experience shows that there is no automatic link that ensures that more migration leads to faster development in migrant-origin countries. The 3 R’s of recruitment, remittances, and returns appear to have speeded up development in southern European nations such as Italy and Spain, as well as in Ireland and South Korea, but may have fostered underdevelopment in many island nations as well as in Moldova and the Philippines. These cases of significant outmigration without development may result from migration providing a safety valve that enabled governments to postpone the reforms necessary for sustained economic growth.

Second, under what circumstances is there a migration surge or hump when countries change their economic policies to speed up development? International organizations such as the World Bank and aid organizations often urge developing country governments to embrace privatization, freer trade, and market-led growth. One result may be labor displacement, as workers previously protected from imports or employed in government-owned or -protected businesses lose their jobs before market-friendly policies create new jobs.

Such pain-before-gain economic policy changes can lead to a migration hump or surge, meaning that more workers leave countries undergoing structural changes that should increase economic and job growth over time. An example of the migration hump is the North American Free Trade Agreement (NAFTA), which went into effect in 1994 and was followed by the highest levels of Mexico-US migration in history (Martin 1993, 2005).

Answering migration-and-development and development-and-migration questions is important because many migrant-sending countries are seeking to send more workers abroad to obtain remittances and forge links to migrant-receiving countries to speed up development. Meanwhile, many industrial countries that receive migrants have slow-growing or shrinking workforces, setting the stage for an apparent match between surplus workers in developing countries and vacant jobs in industrial countries (World Bank 2005). A variety of bilateral and regional agreements and forums, and since 2007 a Global Forum on Migration and Development (, provide venues for governments to discuss the links between migration and development and development and migration.

The entry has five parts. Section 1 reviews recent trends in international migration to emphasize that, even though most people never leave their country of birth, international labor migration is likely to increase rather than decrease in the next several decades. Section 2 explores potential trade-offs between the number and rights of migrants in migrant-receiving countries, while Section 3 assesses the links between migration and development via the 3-R channels of recruitment, remittances, and returns, asking who migrates, how much money they send home, and whether migrants return and work and invest or settle abroad. Section 4 outlines the impacts of development on migration, especially the effects of freer trade and investment policies on migration patterns. Section 5 assesses the state of knowledge on the links between migration and development, and the relationship between development and migration, exploring the implications of the answers for both migration and development policies.

International Migration

The number of international migrants reached a record 191 million in 2005, meaning that 3 percent of the world’s 6.5 billion people left their country of birth or citizenship for a year or more (UN Population Division 2006). Most people who cross national borders do so for economic reasons, and most move from poorer to richer countries. The number of migrants in industrial countries more than doubled from 55 million in 1985 to 115 million in 2005.

There are 135 million births and 55 million deaths a year, for a global natural increase of 80 million (US Census Bureau n.d.). Most of the 135 million babies born in 2008 will likely never cross a national border. As has been true throughout human history, most people live and die near their place of birth and never cross a national border. Those who cross national borders usually move only a short distance, as from Mexico to the United States or Indonesia to Malaysia. There were 62 million migrants from developing countries in industrial countries in 2005, but almost as many migrants, 61 million, had moved from one developing country to another, as from Zimbabwe to South Africa. There are also large flows of people from one industrial country to another, as from Canada to the US, and much smaller flows from industrial to developing countries, as with Japanese who work or retire in Thailand.

Table 1 International Migrants in 2005 (Millions)














Source: UN Population Division (2006).

Migration is the movement of people from one place to another. Migration is as old as humankind wandering in search of food, but international migration over regulated national borders is a relatively recent development, since it was only in the early twentieth century that the system of nation-states, passports, and visas developed to regulate the flow of people over national borders (Torpey 1999).

Long-distance international migration is the rarest type of human migration due to inertia, controls, and hopes for improvement and opportunity at home. Inertia reflects the fact that most people do not want to move away from family and friends and familiar languages and cultures. Second, governments have significant capacity to regulate migration, and they do, requiring passports and visas from visitors and establishing agencies to regulate the entry, employment, and settlement of foreigners (Martin 2003a). Third, historical experience, such as European migration to the Americas in the nineteenth and early twentieth centuries, as well as the more recent experiences of countries that include Ireland, Spain, and South Korea, demonstrate that economic development can turn a country from an emigration to an immigration area within decades (Hatton and Williamson 1998, 2006).

International migration is motivated by differences that are likely to increase in the twenty-first century. Persisting demographic and economic inequalities between countries give people reasons to migrate, while revolutions in communications and transportation allow people in poorer countries to learn about opportunities in richer countries and move to take advantage of them (Martin and Zuercher 2008). There is also a more mechanical reason for more international migration – more borders to cross. There were 193 generally recognized nation-states in 2000, four times more than the 43 in 1900 (Lemert 2005:176). Creating nation-states almost always increases international migration.

Factors Motivating Migration

Migration is a response to differences between areas. There are two major types of differences that prompt people to cross national borders: economic and noneconomic (Massey et al. 1998). The factors that actually persuade a migrant to cross borders are usually grouped into three categories: demand-pull in destination areas, supply-push in origin areas, and network factors that link them.

This demand-pull, supply-push, and network framework makes it possible to distinguish economic migrants who are encouraged to migrate because of a demand for their labor abroad from noneconomic migrants who cross national borders to seek refuge or to join family members settled abroad. A young Mexican may be recruited by a US farmer, a demand-pull factor, and be motivated to migrate by low wages and underemployment at home, a supply-push factor. Networks or links that span borders help migrants to move, as when a young man or woman has relatives or friends abroad who can explain how to cross a border, finance the trip, and provide shelter and a job upon arrival.

Demand-pull, supply-push, and network factors rarely have equal weights in individual or family situations, and the importance of each factor can change over time. Generally, demand-pull and supply-push factors are strongest at the beginnings of a labor migration flow, while network factors become more important as migration streams mature. This means that the first guest workers are often recruited, but after some return with savings, supply-push and network factors can become more important in sustaining migration. Networks that reduce the risk of crossing national borders for higher wages and more opportunities help to explain why employed workers in a poorer country may quit their jobs and migrate to a country with higher-wage jobs (Martin et al. 2006).

Demand-pull, supply-push, and network factors can evolve in ways that increase or decrease migration over time. The Mexico-US case provides an example of increasing migration over time. The Bracero program admitted almost 5 million Mexican farm workers between 1942 and 1964, and demand-pull factors increased over time as US farmers made investments that assumed migrants would continue to be available. Meanwhile, the Mexican government devoted most of its development efforts in the 1950s to areas not sending Braceros to the US, making many rural Mexicans dependent on US jobs and wages (Martin 2009: Ch. 2).

When the US government stopped recruiting Braceros during the Civil Rights movement of the early 1960s to protect US Hispanics, there was a “golden age” for US farm workers. Cesar Chavez and the United Farm Workers union negotiated 40 percent wage increases in 1966, in part because Mexican Braceros were not available to fill US farm jobs. Entry-level wages under union contracts reached twice the federal minimum wage, a historically unprecedented event (Martin 2003b: Ch. 3). However, strikes called to push farm worker wages still higher at a time when Mexico was undergoing an economic crisis in the late 1970s were broken by US farm labor contractors who often recruited unauthorized Mexicans. The number of union contracts fell, as did the union wage premium.

A decade later, the US government legalized 2.3 million Mexicans and began to negotiate NAFTA in 1990. The Mexican government began to open its economy to international trade and investment, and allowed Mexican farmers to sell or lease their land, loosening the anchor that had encouraged many Mexican migrants to return eventually to Mexico. Hopes for stay-at-home development in Mexico were dashed by a severe economic crisis in 1995–1996, just as the US economy was enjoying a job boom that reduced unemployment below 4 percent. As a result, the number of Mexican-born US residents doubled between 1990 and 2000, from 4.5 million to 9.2 million, and peaked at almost 12 million in 2006 before beginning to fall due to a combination of US recession and stepped-up enforcement (Unauthorized, Population, States and Cities 2008).

Mexico is an example of migration increasing over time, while Italy, Spain, Ireland, and Korea provide examples of countries that sent workers abroad in one decade and received migrant workers a decade or two later. Northern and western European countries recovered faster from World War II than southern European countries. With unemployment rates very low in France and Germany by the early 1900s, and European nations unifying in what became the European Communities, migrant workers were recruited in southern Europe to fill jobs in northern and western Europe.

However, to avoid “too much” migration in a unifying Europe that is based on the four freedoms of moving goods, services, capital, and labor freely between member nations, Italians had to wait 10 years before they could move to France or Germany and seek jobs on an equal basis with French or German workers. By the time Italians got freedom of movement rights in 1967, Italian incomes and job opportunities increased enough so that few Italian workers wanted to emigrate. Economic growth continued, and two decades later Italy was a country attracting migrant workers (Straubhaar 1988; Cornelius et al. 2004; Venturini 2004). Greek, Spanish, and Portuguese workers similarly had to wait seven years for freedom of movement, and few left when they could seek jobs anywhere in the expanding EU (Migration News 2006).

Noneconomic factors such as family unification and seeking refuge from persecution also encourage international migration. In many cases, economic migrants who find jobs abroad seek to unify their families in the country to which they moved. The migration literature often uses nautical metaphors to describe family unification, discussing pioneers who become anchor migrants and set in motion chain migration. Most of the immigrants arriving in industrial countries today are joining family members settled there.

The other major category of noneconomic migrants consists of refugees and asylum seekers. Refugees, per the 1951 Geneva Convention, are persons outside their country of citizenship who fear persecution in their countries of origin based on race, religion, nationality, membership in a particular social group, or political opinion (, and so are unable or unwilling to return home. Asylum seekers, by contrast, arrive in a country and ask to be recognized as refugees in need of resettlement. A UN agency, the United Nations High Commissioner for Refugees (UNHCR), estimated there were 11.4 million refugees in 2007, most in neighboring countries, such as Afghanis in Pakistan and Iraqis in Syria. Some 650,000 foreigners applied for asylum in industrial countries in 2007 (UNHCR 2008:13). Most asylum applicants are not recognized as refugees, but many are nonetheless allowed to remain in the countries to which they have moved for at least a few years as their applications and appeals are considered.

Differences and Networks

Most of the world’s people, and most population growth, are in developing countries. The world’s population, which reached 6 billion in October 1999, is growing by 1.3 percent or 80 million a year, with 97 percent of population growth in developing countries. In the past, significant demographic differences between areas prompted large-scale migration. For example, Europe had 21 percent of the world’s almost 1 billion residents in 1800, and the Americas 4 percent. When there were five Europeans for every American, millions of Europeans immigrated to North and South America in search of economic opportunity as well as religious and political freedom (Hatton and Williamson 1998).

Table 2 World Population by Continent, 1800, 2000, and 2050 (% Shares)




World (millions)
















Latin America and Caribbean




Northern America







(*) Projected.

Source: United Nation (1999: Table 2).

Will history repeat itself as the demographic weights of the continents change? Africa and Europe have roughly equal populations today, but by 2050 Africa is projected to have three times more residents than Europe. Europe is projected to shrink, so that by 2050 there are projected to be three Africans for each European. If a growing Africa remains poorer than a shrinking Europe, the diverging demographic trajectories of the African and European continents may encourage young people to move from overcrowded cities such as Cairo and Lagos to shrinking Berlin and Rome.

The economic differences that encourage international migration have two dimensions, one fostered by inequality between nation-states and the other by inequality within them. National per capita incomes range from less than $250 per person per year to more than $50,000 a year, a difference that provides a significant incentive, especially for young people, to migrate in search of higher wages and more opportunities (World Bank 2008). About 30 nation-states are considered high income, with per capita incomes of $11,100 or more in 2005.

As defined by the World Bank, the high-income countries had a billion residents in 2005, almost a sixth of the world’s population. Their gross national income was $36 trillion, 80 percent of the $45 trillion global total. The average per capita income of $35,000 in high-income countries was 21 times the average $1,750 in low- and middle-income countries. Despite rapid economic growth in some developing countries, including the East Asian “Tigers” in the 1990s and China and India more recently, the 20:1 ratio in per capita incomes between high-income and other countries widened between 1975 and 2000, and has shrunk only slightly since.

By 2005, average per capita incomes in high-income countries were 61 times higher than those of low-income countries, and 13 times greater than those of middle-income countries. This provides significant economic incentives for especially young people to migrate, since achieving the same income as the average resident in the destination country could mean an income 13 to 61 times higher than at home.

A second dimension to economic inequality adds to international migration pressures. The world’s labor force of 3 billion in 2005 included 600 million workers in high-income countries and 2.4 billion in the low-income countries. Labor forces in low-income countries are projected to increase by 600 million between 2005 and 2020, meaning that projected labor force growth in low-income labor forces is equal to the number of workers in high-income labor forces. This means that economic development rather than labor migration is likely to improve conditions for most of the world’s workers.

Table 3 Global Migrants and per Capita Income Gaps, 1975–2005

Migrants Millions

World Population Billions

World Migrants Millions

Annual Migration Increase Population

Countries Grouped By per Capita GDP ($)

Ratio High-Low

Ratio High-Middle
































































Note: The 1990 migrant stock was raised from 120 million to 154 million, largely to reflect the breakup of the USSR. 2005 data are gross national income.

Source: UN Population Division and World Bank Development Indicators; 1975 income data are 1976.

Table 4 World, Developed Country (DC), Least Developed Country (LDC) Economically Active Population (EAP), 1980–2020 (in Thousands)






World EAP






More Developed EAP






Less Developed EAP










World EAP





More Developed EAP





Less Developed EAP










World EAP





More Developed EAP





Less Developed EAP





Source: ILO Laborsta, http:/ (n.d.).

Improving conditions so that workers in a globalizing world elect to remain in what are now low-income countries is a major challenge. In developing countries, 40 percent of workers are employed in agriculture, a sector that is often taxed by governments even though farmers and farm workers usually have lower incomes than urban residents. One result of low rural incomes is rural-urban migration, explaining why more than half of the world’s residents lived in cities in 2008 (UNFPA 2007). High-income countries had “Great Migrations” off the land in the 1950s and 1960s, providing workers for expanding urban factories rather than sending workers abroad. Similar Great Migrations between farms and cities are underway in countries from China to Mexico, and some of these rural-urban migrants are crossing national borders.

Rural-urban migration in developing countries may fuel international migration for three major reasons. First, ex-farmers and farm workers are most likely to accept 3-D (dirty, dangerous, and difficult) jobs inside their countries and abroad, as is evident in China’s coastal cities and with Mexicans in the United States. Second, rural-urban migrants often make physical as well as cultural transitions when moving from villages to cities, and some may find the transition from farm to city as easy abroad as at home, especially if previous migrants already settled there aid integration. Third, rural-urban migrants within low-income countries usually get one step closer to their country’s exits, since cities are the places to obtain visas and documents for legal migration or make arrangements for illegal migration.

Differences encourage migration, but it takes networks or links between areas to encourage people to move. Migration networks include communication factors that enable people to learn about opportunities abroad as well as the migration infrastructure that actually transports migrants over national borders, such as recruiters and travel agencies, and the rights regime that allows migrants to remain abroad (Hollifield 1992). Migration networks have been shaped and strengthened by three revolutions of the past half century in communications, transportation, and rights.

The communications revolution helps potential migrants to learn about opportunities abroad. The best information comes from migrants established abroad, since they can provide family and friends with information in an understandable context. Cheaper communications enable migrants to quickly transmit job information as well as advice on how to cross national borders to friends and relatives at home. For example, information about vacant California farm jobs may be received in rural Mexico, thousands of miles away, before it spreads to nearby cities that have double-digit unemployment rates. Meanwhile, films and television programs depicting life in high-income countries may encourage especially young people to assume that the grass is greener abroad, so that migration will lead to economic betterment.

The transportation revolution highlights the declining cost of travel. British migrants unable to pay one-way passage to North American colonies in the eighteenth century often indentured themselves, signing contracts that obliged them to work for three to six years for whoever met the ship and paid the captain (Gal). Transportation costs today are typically less than $2,500 to travel anywhere in the world legally, and $1,000 to $20,000 for unauthorized migration. Most studies suggest faster transportation payback times today, so that even migrants who paid high smuggling fees can usually repay them within two or three years (Kyle and Koslowski 2001).

Numbers versus Rights and GATS

The communications and transportation revolutions help migrants to learn about opportunities abroad and to cross national borders, while the rights revolution affects their ability to stay abroad. After World War II, most industrial countries strengthened the constitutional and political rights of people within their borders to prevent a recurrence of fascism, and most granted social or economic rights to residents in their evolving welfare states without distinguishing citizens and migrants.

As migration increased in the 1990s, policy makers began to roll back especially socioeconomic rights for migrants in an effort to manage migration. For example, European governments such as Germany included liberal asylum provisions in their postwar constitutions to avoid another situation in which refugees perished because other countries refused them entry, forcing them to return to Nazi Germany. As a result, when foreigners applied for asylum, the government provided them with lodging and food while their applications were pending and, if denied, while they appealed (Martin 2004).

This generous asylum system was tested in the early 1990s, as asylum seekers from Turkey and the disintegrating Yugoslavia migrated to Germany. Over 1,000 foreigners a day applied for asylum in Germany, a total of 438,000 in 1992. The government distributed them throughout the country, and required local communities to provide asylum applicants with housing and food while generally prohibiting them from working. Over 90 percent of the asylum applicants in Germany and other European countries were determined not to be refugees in need of protection, and young foreigners “hanging out” in cities and towns awaiting decisions on applications and appeals helped to set the stage for a backlash against a liberal asylum policy that included attacks on foreigners.

Germany and other European governments responded to the “asylum crisis” in three ways. First, nationals of countries that generated asylum applicants had to obtain visas to legally enter the country, allowing governments to exclude those who might apply for asylum. Second, airlines, shipping firms, and other transporters who brought foreigners to Europe without visas and other documents were fined, prompting careful screening of passengers before departing for European countries. Third, European Union governments agreed to make it difficult for foreigners from “safe” countries, as well as foreigners who transited through safe countries, to apply for asylum. The goal is to prevent so-called asylum shopping, as when an asylum seeker from Turkey passes through Bulgaria and Romania en route to Germany and applies for asylum because conditions for asylum applicants and rates of recognition are better. In this way, the constitutional protection of asylum was maintained, but the number of asylum applicants was reduced by restricting access to the asylum system (Hailbronner 1997).

There was a similar numbers versus rights debate in the United States in the mid-1990s. California voters approved Proposition 187 in 1994, which would have created a state-funded screening system to ensure that unauthorized foreigners would not receive state-funded welfare assistance and schooling. Although federal courts blocked its implementation, Proposition 187 influenced the mid-1990s federal debate over how to reform the US welfare system to save money. Many immigrants had low incomes, and they or their US-born children sometimes received means-tested federal social assistance.

The debate unleashed by Proposition 187 was whether the number of needy immigrants should be reduced but their access to most welfare benefits preserved, or whether the number of immigrants should remain high but their access to welfare assistance restricted. President Bill Clinton endorsed the position of the US Commission on Immigration Reform (1995), which recommended reducing the number of needy immigrants and maintaining their access to welfare benefits. However, employers and some migrant advocates urged no reduction in immigration, even if the result was less access to welfare assistance (Migration News 1996). Employers and migrant advocates won the numbers versus rights debate, and immigration was allowed to remain high while welfare benefits to needy immigrants were curbed.

European countries maintained full rights for asylum seekers, but made it more difficult for foreigners to enter and apply for asylum. The US, on the other hand, allowed the number of immigrants to remain high, but curbed their access to welfare benefits. Balancing migrant numbers and migrant rights is looming as a major policy challenge for governments (Ruhs and Martin 2008), but there is a fundamental difference in the treatment of high- and low-skilled migrants. Globally, there are relative shortages of high-skilled migrants and relative surpluses of low-skilled migrants, so migrant-receiving governments often grant high-skilled migrants more rights than they do low-skilled migrants. Indeed, one can conceptualize numbers and rights sloping upward for the highly skilled and sloping downward for the low-skilled migrant workers.

A concrete example of the numbers and rights trade-off occurred in the Philippines. Israeli-Lebanon fighting in the summer of 2006 resulted in the return of Filipina domestic helpers who complained of mistreatment in Lebanon. The government responded with the “Supermaid” program that, beginning in 2007, requires Filipina domestic helpers going abroad to receive training in emergency health care and other skills and to be paid at least $400 a month.

As a result of this higher minimum wage, the number of Filipinas deployed as domestic helpers fell sharply, from 91,000 newly hired household service workers deployed in 2006 to 40,000 in 2007. Some suspect that some domestic helpers are leaving as gardeners or other types of workers not covered by the $400 a month minimum wage. In other words, establishing a minimum wage for one type of worker, domestic helper, may lead to domestic helpers going abroad to fill jobs that are not covered by the minimum wage, such as gardeners or security guards.

The migrant numbers and rights trade-off has recurred in World Trade Organization (WTO) negotiations over trade in services. The so-called Doha development round began in 2001 and seemingly collapsed in 2008 over differences between industrial and developing countries over farm subsidy reductions, but highlighted tensions between sending countries wanting to send more service providers to higher wage countries and the desire of industrial countries to enforce minimum wage and other laws.

The WTO is committed to liberalizing the movement of goods, capital, and services over borders. Rules for trade in services, which totaled $3.3 trillion in 2007, are negotiated under the General Agreement on Trade in Services (GATS), potentially bringing the movement of service providers – workers – under the purview of the WTO. Services are often produced and consumed simultaneously, as with haircuts, and sometimes change the consumer, as with medical services.

There are four major modes or ways to provide services across national borders: cross-border supply, consumption abroad, foreign direct investment (FDI) or commercial presence, and Mode 4 migration, which the GATS refers to as the temporary movement of “natural persons.” Mode 4 movements of service providers can be substitutes or complements to the other types of trade in services. For example, accountancy services can be provided online (Mode 1) rather than by sending an accountant abroad to audit financial statements (Mode 4), or the client could travel to the country where the service provider is located (Mode 2), rather than use Mode 4. Similarly, an IT service provider could visit a client abroad (Mode 4) or provide services to foreign clients via the Internet (Mode 1).

Developing countries led by India want to liberalize Mode 4 movements of service providers. They seek concessions from the industrial countries in four major areas: eliminating the economic needs tests receiving countries use to determine if foreign workers are needed, expediting visa and work permit issuance, facilitating credentials recognition so that service providers can obtain needed licenses, and exempting foreign service providers from participating in work-related benefit programs and the payroll taxes that finance them.

Each of these issues has a numbers versus rights component, as illustrated by the debate over whether migrant service providers should be required to receive at least the minimum wage in the destination country. A bedrock principle of ILO Conventions 97 and 143, as well as the 1990 United Nations International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families, is wage parity between migrant and local workers – all workers should be treated equally in the labor market. However, Chaudhuri et al. (2004) recognize that requiring migrant service providers to be paid minimum or equal wages may reduce the number of service providers accepted in higher-wage countries: “Wage-parity […] is intended to provide a nondiscriminatory environment, [but] tends to erode the cost advantage of hiring foreigners and works like a de facto quota.” Another Indian economist says that equal pay for foreign and local service providers “negates the very basis of cross-country labor flows which stems from endowment-based cost differentials between countries” (Chanda 2004:635).

Resolving such migrant numbers and migrants rights trade-offs is not easy. However, with many developing countries hoping to send more migrant service providers abroad, and some preferring more migrants to equal wages for migrants in foreign labor markets, the numbers-rights trade-offs that were controversial in dealing with asylum in Europe and welfare benefits in the US are likely to recur at the WTO and in other international forums, including those dealing with migration and development.

Migration and Development

Many economists consider trade and migration to have similar effects on sending and receiving countries. Trade theory and experience demonstrate that countries specializing in the production of the goods in which they have a comparative advantage, goods they can produce relatively cheaper than other countries, and trading for goods that other countries produce relatively cheaper have larger economies than countries that are closed to trade. Dollar and Kraay (2002) argue that the “aggregate annual per capita growth rate of the globalizing group [of developing countries] accelerated steadily from one percent in the 1960s to five percent in the 1990s. During that latter decade, in contrast, rich countries grew at two percent and nonglobalizer [developing countries] at only one percent.”

Sending workers abroad should have effects similar to trade in goods on the economies and labor markets of migrant-sending and migrant-receiving countries. As migrants move over borders, wages rise in countries that workers leave and fall or rise slower in migrant-receiving countries. Eventually, there should be convergence in wages and levels of economic development, reducing the incentive to migrate for economic opportunity.

However, there is no automatic link to ensure that more migration leads to faster development. Migration can accelerate development in countries poised to grow, such as the southern European countries in the 1960s and 1970s, or perpetuate underdevelopment, as in many island countries today.

The effects of migration on development are often grouped in the 3-R channels of recruitment, remittances, and returns. Recruitment refers to who goes abroad – international migration is generally most beneficial to developing countries if low-skilled workers who would have been unemployed or underemployed at home are recruited for jobs abroad. Remittances are that portion of the monies earned by migrants abroad that is sent home; with higher wages abroad, remittances usually exceed what migrants would have earned at home, so that migration can improve living standards for migrant families and provide additional capital to developing countries. Returns focus on what migrants do after a period of employment abroad, asking whether they acquired new skills that are useful for development or whether they return to rest and retire.

Recruitment: Virtuous and Vicious Circles

The impacts of recruitment on development can be captured by extreme examples summarized as virtuous or vicious circles (Martin et al. 2006: ch. 3). Sending Indian IT workers abroad provides an example of a virtuous migration and development circle, while the emigration of African doctors and nurses provides an example of a vicious circle. Virtuous circles are more likely if migrants are abroad for only a short time, they send home significant remittances, and they return with new skills and links to industrial countries that increase trade and investment. Vicious circles can be the outcome of migrants fleeing countries perceived to be sinking ships.

The Indian IT case began with multinationals that recognized their talented Indian employees and moved them to subsidiaries outside India. Eventually, Indian firms that specialized in moving IT workers to foreign jobs evolved, especially during the late 1990s IT boom, when there were fears of so-called Y2K problems with computers.

Indians abroad learned what clients there expected, and this experience allowed some Indians to return to India to perform work for foreign clients, creating jobs in India (Kapur 2007). Between 1985 and 2005, the number of IT workers in India ballooned from 7,000 to over 700,000, Indian IT workers gained a global reputation for high-quality work at low cost, and the quality of IT services in India improved since there was no reason not to provide the same quality of services to local as opposed to foreign clients, accelerating India’s development. The Indian government bolstered the IT industry by reducing barriers to imports of computers, helped to assure a reliable communications infrastructure, and allowed the state-supported Indian Institutes of Technologies to set quality benchmarks for IT education. This virtuous circle created new jobs in India as well as a new source of export earnings.

The Indian government supported migration that accelerated development in India. The governments of many African countries, by contrast, complain that the recruitment of health care professionals by public and private health services in their former colonial rulers has led to a vicious circle in which a lack of health care slows economic development.

In the late 1990s, the British National Health Service (NHS) hired more doctors and nurses to reduce patient waiting times, including some from former African colonies, prompting several African governments to complain that the UK was recruiting doctors and nurses who had been trained at taxpayer expense, lowering the quality of health care in developing countries strained by AIDS.

Some African countries demanded compensation for the recruitment of their health care professionals, and some withheld the final licenses usually needed to find jobs abroad until doctors and nurses trained at government expense completed a period of service, often in a rural area.

These complaints of a health care brain drain led to ethical recruitment initiatives. For example, the UK Code of Conduct for Recruitment of Health Professionals, developed in 2001 and applicable only to the National Health Service, asserts that “international recruitment is a sound and legitimate” method of hiring, but advises the NHS not to “target developing countries for recruitment of health care personnel unless the government of that country formally agrees” (Buchan 2002:19). The World Health Organization expects to issue a code of best practices for the international recruitment of health care workers (

The health-professional worker migration issue is complex. First, government-set salaries for doctors and nurses have not increased significantly despite the exodus. Second, there are human rights concerns about restricting the right of health care workers to leave a country. Physicians for Human Rights (PHR), winner of the Nobel Peace Prize in 1997 for its work to ban land mines, issued a report in July 2004 that called on industrial nations to reimburse African countries for the loss of health professionals educated at government expense. However, PHR also emphasized that there is a trade-off between the rights of African health professionals to seek a better life abroad and the rights of people in their home countries to decent health care (Dugger 2004).

Clemens (2007) agrees that the interactions of health care deficiencies and migration are complex, but concludes that solutions to health care workforce issues in many African countries lie inside the country. For example, many developing countries do not sufficiently compensate doctors and nurses assigned to rural areas, and some prohibit the establishment of private health care training institutions.

The vicious circle in which out-migration leads to slower development is an example of brain drain concerns that have been recognized for decades (Adams 1968). However, there has been no agreement on a global response. One prescription offered by Bhagwati (1976) would have migrant-receiving countries compensate migrant-sending countries for the cost of the education embodied in the migrants from developing countries employed inside their borders. This compensation proposal has suffered from practical implementation problems, including deciding how to collect extra or normal taxes paid by migrants in industrial countries and how to distribute such compensation in their countries of origin.

Compensation has in recent years been downplayed, in part because of the brain gain via brain drain theory. The governments of countries that send educated workers abroad “lose” the investment made in their education and may suffer slower growth as a result, the classic brain drain. However, the brain gain via brain drain theory holds that, because some developing-country professionals go abroad and enjoy higher earnings, the average earnings of all professionals in a developing country rise and encourage more young people to go to school (Mountford 1997; Beine et al. 2001). However, not all of those who acquire health care or other professional qualifications will emigrate for personal and other reasons, so the sending country winds up with more nurses than if it prohibited the recruitment of “essential workers.” A moment’s reflection suggests that the brain gain via brain drain theory is not widely applicable in the contemporary world, with the possible exception of Cuba and North Korea.

The complexity of the brain drain debate is heightened by the contrast between the mostly African countries demanding compensation for the recruitment of their health care workers and countries such as the Philippines, which has government agencies to promote the out-migration of professionals, including nurses. Most Filipino health care workers who emigrate are trained in private, tuition-charging schools, and most nursing students take out loans to cover the cost of their education. The Filipino experience suggests that changes in policies unrelated to migration, such as how education is financed, may be more important than trying to manage the brain drain via migration and compensation policies.

The recruitment experiences of most migrant-sending countries are between the virtuous and vicious migration and development extremes. Indeed, governments in migrant-sending countries often have little control over who is selected to fill foreign jobs, since employers abroad normally determine who to hire. Employers want the best worker they can recruit to fill vacant jobs, even if that means that an engineer from a low-wage country winds up filling a low-skill job abroad, resulting in “brain waste.”

Remittances: Shortcut for Development?

Most migrants remit some of their foreign earnings to family and friends at home. During the 1990s, when remittances to developing countries doubled, sending-country governments and development institutions became aware of rising remittances, which often provided the foreign exchange essential to cover balance-of-payments deficits and sustain economic development policies (Ratha 2003). Leaders of major labor-sending countries began to acknowledge the importance of remittances by symbolically welcoming home some returning migrants at Christmas each year, as in the Philippines, or calling migrants “foreign exchange heroes,” as with former Mexican President Vicente Fox.

Remittances pose several migration and development challenges. Many national governments as well as international organizations such as the World Bank want to increase remittances, which can be accomplished by sending more workers over national borders and ensuring that they earn, save, and remit. Governments and international organizations want to reduce the costs of sending money via formal channels, which should reduce the use of informal channels for remittances and minimize the opportunity for terrorists to use such channels.

The World Bank reported that remittances totaled $337 billion in 2007, up 13 percent from $297 billion in 2006 (World Bank n.d.). The top five recipients of remittances are India, which received $27 billion in 2007; China, $26 billion; Mexico, $25 billion; the Philippines, $17 billion; and France, $12 billion. The major sources of remittances were countries with the most migrants: the US, $42 billion; and Saudi Arabia, $16 billion. In 2007, 59 countries received more than $1 billion in remittances, and in 45 countries remittances were more than 10 percent of GDP.

Most migrants are from developing countries, and 75 percent of global remittances went to developing countries – the $240 billion received by developing countries in 2007 was almost triple the $86 billion they received in 2000. There are several reasons for rapidly rising remittances, including better reporting after the September 11, 2001, terrorist attacks; lower costs to remit via banks (which are more likely to report remittances); and the depreciation of the dollar, which raises the dollar value of remittances transferred in other currencies (World Bank 2006:xiii). Another factor increasing formal remittances is the spread of banks from migrant countries of origin to migrant destinations, where they offer services in the migrant’s language as well as ancillary services to migrant relatives at home.

The major migration and development challenge tackled over the past decade has been to reduce the cost of sending small sums over borders via regulated financial institutions. There are three steps involved in a typical remittance transfer: the migrant pays the remittance to a money transfer firm such as Western Union in one country, the money transfer firm instructs its agent in another country to deliver the remittance, and the agent pays the recipient.

These three steps are sometimes called the first mile, the intermediary stage, and the last mile, and they involve three major costs. First is the fee paid by the sender, typically $10 to $30 to send the usual $200 remittance. Second is the exchange rate difference, as when dollars are converted to pesos at a rate less favorable than the interbank exchange rate. Third are fees that may be charged to recipients when they collect their funds (in many cases, remittance pick-up points are located in stores or other outlets that encourage recipients to spend some of the money received). There may also be an interest rate float if there is a time lag between paying and receiving remittances.

The second remittance-related migration and development challenge is to ensure that the spending of remittances accelerates development in migrant-sending areas. Most studies suggest that each $1 in remittances generates a $2 increase in economic activity, as the spending of remittances on housing, education, and health care creates jobs (Taylor and Martin 2001; Yang and Martinez 2006). Most remittances are spent on daily needs, as would be expected because foreign earnings replace money that would have been earned locally. However, remittances often exceed what would have been earned at home, and after basic consumption needs are satisfied, remaining remittances are often used to build or improve housing, educate and provide health care to children, and expand or launch new businesses.

Remittances can speed up development if macroeconomic fundamentals are correct. Sound economic policies give all residents, migrants and nonmigrants, incentives to save and invest (World Bank 2006). One policy question is whether governments should have special policies to encourage migrants to send remittances, such as matching remittances that are contributed to develop migrant areas of origin.

Mexico’s 3×1 matching program is perhaps the best known. It provides $3 in federal, state, and local funds for each $1 contributed by migrants abroad for improvements in their areas of origin. However, the 3×1 program has limited impacts on development because it is small, reflects migrant priorities that may be different from those of nonmigrants, and reduces funds available for other projects. Mexican migrants contributed $20 million under the 3×1 program in 2004, which was one-tenth of 1 percent of Mexico’s $20 billion in remittances. Spending the total $80 million available was sometimes problematic, since migrants often want to improve the local church for weddings and festivals, while nonmigrants may want water and sanitation system improvements. Matching funds come from government development budgets, so migrant contributions effectively “leverage” development funds for purposes that may run counter to the priorities of nonmigrants.

The best way for a migrant-sending country to maximize remittances and their impacts on development is to get the economic fundamentals correct, which means having an economy that is growing, an appropriate exchange rate, and a climate that fosters small investments. Migrants can sometimes have other impacts that speed development, as when they steer investments to their countries of origin and persuade their (foreign) employers to buy products from their countries of origin. Migration increases travel and tourism between countries, as well as trade in ethnic foods and goods that migrants became familiar with while abroad.

Returns: Entrepreneurs or Retirees?

The third R in the migration and development equation is returns. Migrants who have been abroad can return with new energy, ideas, and entrepreneurial vigor that accelerate development in their countries of origin. Migrants are generally drawn from the ranks of the risk takers, and a combination of their remittance savings and skills acquired abroad can speed development, as in southern Europe and Korea. On the other hand, if migrants settle abroad and cut ties to their countries or origin, or if they return only to rest and retire, there may be few development-accelerating impacts of migrant returns, as in many Pacific and Caribbean islands. There is also the possibility of back-and-forth circulation, which can under some conditions contribute to economic growth in both countries.

A desirable outcome is migrant-led development, meaning that migrants accelerate development upon their return. Taiwan provides an example. Government policy encouraged out-migration during the 1960s and 1970s, and return migration in the 1980s and 1990s. During the 1960s and 1970s, most government educational spending was for primary and secondary education, so Taiwanese often went abroad for university education, and over 90 percent of Taiwanese graduates remained overseas. When Taiwan’s economy began to grow rapidly in the late 1970s, the government established the Hinschu Science-Based Industrial Park to encourage Taiwanese abroad to return by offering financial incentives and subsidized Western-style housing (Luo and Wang 2002). Hinschu, begun in 1980, became a major success by 2000, when over 100,000 workers were employed by 300 companies, half headed by returned migrants. Many local governments in China have followed a similar strategy of subsidizing the return of migrants to speed economic development. For example, Shanghai reportedly had 30,000 returned professionals in 2002, 90 percent of whom had MS or PhD degrees earned abroad (Kaufman 2003; Tempest 2002).

It is much harder to persuade migrants who have been successful overseas to return and contribute to the development of countries that are not taking off economically. There is often little need for Taiwanese-style return subsidies if a developing country grows rapidly, as is evident from Ireland to China. But if prospects for development at home are uncertain, even subsidies may be insufficient to persuade migrants settled abroad to return. Several international organizations operate return-of-talent programs, offering to cover the cost of travel and housing for professionals settled abroad who return to work in government or educational institutions. However, the contribution of such programs to development appears to be very modest (Keely 1986), since human capital cannot reverse the effects of deficient development policies.

Rising interest in migration and development has prompted more governments to recognize that migrants abroad may be a key to development at home. Many migrant-sending governments have enacted legislation that permits or encourages dual nationality or dual citizenship in an effort to maintain links to citizens abroad. Some researchers believe that, in a globalizing world, dual nationality can be the keystone for “a Diaspora model [of development], which integrates past and present citizens into a web of rights and obligations in the extended community defined with the home country as the center” (Bhagwati 2003).

Development and Migration

Economic theory teaches that inequalities between nation-states can be reduced as workers cross borders to fill jobs or as jobs move to workers via freer trade and investment. This means that migration and trade can be substitute policies to accelerate economic convergence. Congress in 1986, after enacting employer sanctions laws to slow illegal migration, created the US Commission for the Study of International Migration and Cooperative Economic Development to seek “mutually beneficial” ways to reduce such migration. The Commission visited migrant-sending countries and sponsored studies that concluded that “expanded trade between the sending countries and the United States is the single most important remedy” for illegal or unauthorized migration (1990:pxvi). It recommended that the US government free up trade and investment with migrant-sending countries in Latin America to speed up economic growth and reduce emigration pressures.

The Commission’s report, released after the Canada-US Free Trade Agreement (FTA) went into effect in 1989 and just as the Mexican government requested an FTA with the US, had an immediate policy impact. As quoted in a George H.W. Bush letter to Congress (May 1, 1991), then-Mexican President Carlos Salinas, in urging the US government to approve an extension of the FTA to Mexico, said that freer trade would mean “more jobs…[and] higher wages in Mexico, and this in turn will mean fewer migrants to the United States and Canada. We want to export goods, not people.”

The freer trade recommended by the Commission involves producing a good in one country, moving it over a border, and consuming it in another country. Trade theory teaches that, if each country specializes in producing the goods in which it has a comparative advantage, global production increases and makes most people in trading nations better off. This theory explains the experience of Europe and North America. Europeans moved to North America in the nineteenth century, and trade largely replaced migration in the twentieth century (Hatton and Williamson 1998).

Managing the Migration Hump

However, the fact that trade and migration can be substitutes in the long run does not mean they are also substitutes in the short run. Indeed, in shifting from a closed to an open economy, trade and migration can increase together because of labor displacement. For example, NAFTA lowered barriers between the US and Mexico in goods such as TVs and farm commodities such as corn. Some US factories making TVs closed and shifted production to Mexico, while the US sent more corn to Mexico, which made producing corn on small plots in Mexico even less profitable. The displaced US workers did not migrate to Mexico, but many of the displaced Mexican farmers responded to demand-pull, supply-push, and network factors and migrated to the US, producing a migration hump.

The Commission anticipated the migration hump, warning that “the economic development process itself tends in the short to medium term to stimulate migration” (1990:pxvi). It urged the US and Mexican governments to cooperate to manage the migration hump and thus reduce US opposition to freer trade with Mexico. The US and Mexican governments did not take the Commission’s advice, which was one reason why NAFTA was so controversial in the US. US unions made the defeat of NAFTA their top priority in 1992 and 1993, and Reform Party presidential candidate Ross Perot made opposition to NAFTA one of the pillars in a campaign that won 19 percent of the votes cast in 1992.

The critical policy parameters are A, B, and C, which measure how much migration increases as a result of economic integration (A), how soon migration returns to pre-free-trade levels (B), and how much migration is “avoided” by economic integration (C) (see Figure 1). Generally, three factors must be present to create a migration hump: a demand-pull for migrants in the destination country that increases with freer trade, a supply-push in the origin country that increases with freer trade, and established migration networks that can move workers across borders. All three factors were present in the Mexico-US case, a major reason why migration and trade increased together during the first decade of NAFTA.

Migration and DevelopmentClick to view larger

Figure 1 The Migration Hump

Policies to deal with the migration hump generally require governments in migrant-sending countries to do more to prevent unwanted migration. Such cooperative policies are hard to develop and implement because the same networks that enable migrants to cross borders make it hard to slow migration when trade provides more reasons to move. The dense networks moving Mexicans to the United States make the sensitivity or elasticity of Mexico-US migration to wage and employment changes much larger than networks linking more distant countries to the US, and helps to explain why trade-induced changes in rural Mexico are more likely to increase migration to the US than a similar free-trade pact with Chile.

Freer trade may allow developing countries now sending migrants abroad to produce and export more goods, but they may lack the capital needed to build factories and create jobs to keep workers at home. Remittances can provide some of this missing capital, but foreign direct investment (FDI) in migrant-sending countries and Official Development Assistance (ODA) combined exceed remittances.

FDI represents private funds invested in other countries. FDI totaled $974 billion in 2005, but over 70 percent of these private funds were invested in the high-income countries, as when foreigners buy US firms. FDI flows to countries where investors expect profits rather than to countries in need for jobs to reduce emigration. For this reason, more FDI goes to developing countries that receive migrants rather than to countries sending workers abroad. For example, Malaysia received about $4 billion in FDI in 2005, four times more than the Philippines, even though 20 percent of Malaysia’s workers are migrants while the Philippines sends a million workers a year abroad (World Bank 2008: Table 5). Countries such as Moldova, which sends a third of their workers abroad, receive very little FDI in part because foreign investors say Moldova and similar migrant-sending countries lack sufficient qualified workers.

Official Development Assistance (ODA) includes grants and low-interest loans given by one country to assist development in another. The OECD countries that belong to the Development Assistance Committee provided $104 billion in ODA in 2006, about 0.3 percent of their combined GDP. The US provided the most ODA, $24 billion; followed by Britain, $12.5 billion; Japan, $11 billion; and France and Germany, $10 billion each. Sweden and Norway provided $4 billion and $3 billion in ODA, respectively, almost 1 percent of their GDP.

Some countries, notably France and Spain, have “co-development” programs that link economic development assistance and cooperation to manage migration. French aid programs in West Africa, for example, deal with the integration of Africans in France and promote economic development in areas sending migrants to France. The Spanish government has agreements with Morocco and other migrant-sending countries that admit a certain number of migrants in exchange for cooperation to deal with unauthorized migrants. For example, the Moroccan government must accept the return of unauthorized Moroccans and nationals of other countries who transited Morocco en route to Spain.

The Global Forum on Migration and Development (GFMD) provides a forum for governments to review these migration and development agreements. Participating governments usually endorse such agreements, with sending countries emphasizing the high-wage foreign jobs and receiving countries emphasizing cooperation to reduce unauthorized migration. For example, Spain and Senegal signed a bilateral agreement in 2007 that offers 2,700 work visas for Senegalese in exchange for cooperation to reduce illegal migration in small boats to Spain’s Canary Islands. The migration part of the program began in 2008, and immediately ran into obstacles, when Spanish strawberry growers requested women, but the Senegalese government offered both men and women. Senegal wants to reserve many of the Spanish work visas for Senegalese expelled from Spain, but the Spanish government does not want to reward those expelled with legal work permits.

The GFMD is also highlighting the need for policy coherence to ensure that especially industrial country policies reinforce one another to reduce unauthorized migration. An example of policy incoherence is farm policies. Most industrial countries subsidize their farm sectors, which keeps them larger than they would be if there were free trade. Many of the workers employed in industrial country agriculture are migrants from developing countries. In this case, reducing farm subsidies and freeing up trade could create jobs in migrant-sending countries and reduce unauthorized and unwanted migration.

Conclusions: The Migration-Development Nexus

The number of international migrants, persons outside their countries of birth or citizenship for a year or more, is rising. Most unwanted migrants move from developing to industrial countries, prompting discussion of remedies for the “root causes” of migration. The most common root cause is lack of opportunity at home, and the usual remedy is faster economic development.

Economic development means raising the average per capita income of a country’s residents; rising per capita incomes are usually associated with other indicators of development, including higher rates of literacy and longer life expectancies. Developing countries are defined by the World Bank as those whose residents had average per capita incomes below $11,100 in 2006 – economic development means raising per capita income enough to narrow the gap between lower- and higher-income countries to levels that do not encourage large numbers of workers to emigrate.

The major migration and development channels are recruitment, remittances, and returns. Each of these three migration Rs can operate in ways that speed up or slow down economic development, that is, there is no equation that guarantees that sending more workers abroad will speed up economic development at home. The 3 Rs can create virtuous circles that speed development, as with Indian IT, or lead to vicious circles that slow development, as is alleged with African health care professionals who emigrate.

The freer trade that can speed up development can also increase migration, producing a migration hump. This can make policies that aim to substitute trade for migration problematic, as with NAFTA, which displaced some rural Mexicans who migrated to the US. The migration hump can be managed by governments, but a more common response is to link aid to cooperation to reduce unwanted migration, as in France and Spain.

The WTO’s GATS negotiations that aim to liberalize the movement of services and service providers over national borders highlight the promises and pitfalls of using migration to speed up economic development. Many developing countries, bolstered by World Bank studies, argue that if industrial countries open their doors wider to migrant service providers, development in migrant countries of origin will accelerate. Most industrial countries have national laws that require all workers to receive minimum wages and require migrants to receive the same wages and benefits as local workers. Some developing countries see minimum and equal wages as a form of protectionism aimed at limiting the number of migrant service providers. Resolving this trade-off between migrant numbers and migrant rights is a central challenge of the twenty-first century.


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