Home >> History, Ideology & Science >> Globalization

     Email   Print 

Migration creates efficiency gains

Bhuwan Thapaliya - 3/18/2011

Throughout history migration has been an important social and economic safety valve for most nations especially the underdeveloped ones. Considering so, there has been a sharp increase in labor mobility allowing the laborers to relocate to foreign soils. Today remittances have become the biggest source of foreign earnings for innumerable developing countries.

International labor mobility offers great potential gain for both the home and the host country. But despite its high productivity and reduced labor costs in the host country, international migration remains politically charged. Migrants send remittances to relatives back home, boosting incomes in the home country but migration also raises various socio-economic concerns: not everyone gains.

Nonetheless, migration creates efficiency gains when workers move to where they are more productive. These gains can be widely distributed: to the migrants as higher earnings, to their countries of origin through remittances, and to the destination country through lower production costs.

Date reveals that every remitted dollar generates an additional three in economic activity in the receiving country. But not everyone necessarily gains, particularly if unskilled migrants displace native workers with similar skills. In the short to medium term, however, the effects depend on whether the migrants’ skills complement or substitute for the skills of native workers and of those left behind.

Migration generally leads to important gains from the sending country, primarily through remittances. For an underdeveloped nation such as Nepal, remittances represent a sizable share of GNP—between 18 to 20 percent. Because international wage differences are so large, the amounts remitted are often a multiple of what the migrants could have earned at home.

However, remittances often increase income inequality as migrants rarely come from among the poorest households. There are, however, offsetting effects—as migration networks develop and cost fall, poorer workers can afford to migrate. Furthermore, remittances have increased investment in rural areas boosting the demand for unskilled workers.


The fear of brain drain lurks in the developing world and it is regarded as the main problem of migration. However, no efforts are raised to contain them at home. Hence brain drain cannot be cured just by blaming migration. Underdeveloped nation’s unemployment problem is big as ever.

Hence, with emerging markets playing an increasing role in driving growth, labor integration should be a key component of a sustained and inclusive growth strategy for these nations.

Unemployment is a big hurdle in the way of development of most countries especially the underdeveloped ones. Unemployment means rising poor population and poverty means inefficiency, minimal productivity and underdevelopment.



Thus, it is necessary to launch a frontal attack on unemployment problem and reduce the underdevelopment syndromes through migration so that human resources are utilized for the development of the underdeveloped countries through the remittance money they send back home.



However, there remain some significant risks in the global environment—slowing worker remittances, hesitant exports, volatile commodity prices, and uncertain global recovery. Nonetheless, much capital is needed for economic development in underdeveloped countries and remittance money could do the trick.



To sum it up, underdeveloped nations face unique challenges such as those stemming from conflict, political ambiguity and insecurity which will need to be addressed if they are to embark on the voyage of economic stability through the engine of migration.