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Costs and Benefits of Migration for
Developing Countries
Theme: Literature Review of
Finance and Migration
Name:
Jiawei Tang
.
Overview of Migration Issues
1. Brain Drain vs. Remittances:
Developing countries lose skilled workers to emigration (brain drain) but gain from remittances
sent back by migrants.
2. Labor Market Impacts:
Migration affects wages and jobs in both sending and receiving countries, needing careful study.
3. Social Integration Challenges:
Rapid and diverse immigration strains social unity and cultural integration in countries.
4. Border Security vs. Migrant Rights:
Countries balance security issues from undocumented migration with migrants’ human rights
(Lagakos et al., 2023).
5. Policy Complexity:
Managing migration involves complex policy choices affecting development and labor in both
sending and receiving nations.
Economic Costs
1.Remittances and Economic Dependency:
Migrant remittances boost the economy but can create a reliance on these funds, reducing local productivity and
innovation.
2.Loss of Skilled Labor:
Brain drain, the loss of professionals like doctors and engineers, limits a country’s ability to offer key services.
3.High Emigration Costs:
Emigration is costly due to paperwork, visa processing, and border management.
4.Impact on Local Wages:
More workers from migration might lower wages, especially in less skilled jobs. (Gaspar & Ampudia de Haro, 2020)
5.Strain on Public Services:
Migrants can overwhelm services such as healthcare and transportation, increasing government expenses.
Social costs
1. Social Tensions:
Rapid migration can lead to social issues like discrimination and conflicts, especially with cultural,
religious, or language differences (Gaspar & Ampudia de Haro, 2020).
2. Cultural Challenges:
Migrants might struggle to adapt to new cultures, resulting in social isolation or exclusion.
3. Pressure on Healthcare:
The need for healthcare among migrants can put a strain on healthcare systems, particularly in
developing countries.
4. Education Challenges:
More migrant children in schools can create challenges, needing extra resources for their education.
5. Housing Issues:
Migration can greatly increase housing demand, leading to overcrowding and poor living conditions
(Lagakos, 2020).
Political Costs
1. Policy Complexity:
Balancing local and migrant interests makes managing migration policies complex (Lagakos, 2020).
2. Political Debates:
Migration debates can lead to divided opinions and challenges in political stability.
3. Integration Challenges:
Governments may need to invest in language training, legal support, and social services to help migrants
integrate.
4. Border Security:
Higher migration might require more spending on border control and law enforcement (Lagakos et al.,
2023).
5. Public Opinion:
Shifts in public attitudes towards migration can affect government decisions and policies.
Economic Opportunities and Costs
• Employment Competition: According to (Oliinyk et al., 2021) increased competition for
jobs can lead to unemployment and wage depression, particularly in sectors where
migrants are concentrated.
• Informal Labor: Some migrants may engage in informal labor markets, which can bypass
labor regulations and tax systems, potentially impacting the formal economy.
• Economic Disparities: Migration can exacerbate economic disparities within the country,
as wealth and job opportunities may be concentrated in certain regions.
• Resource Allocation: Governments may need to allocate resources to address the
economic and social impacts of migration, diverting funds from other development
projects (Morgan et al., 2019) .
Security and Health Costs
:
• Healthcare Strain:(Lagakos, 2020) states that the healthcare system may face increased
demand due to migrants’ health needs, potentially straining limited healthcare
resources.
• Security Concerns: Managing border security and addressing potential security risks
associated with migration can require significant financial and human resources.
• Human Trafficking: Efforts to combat human trafficking, which can be associated with
irregular migration, involve law enforcement and administrative costs (Morgan et al.,
2019) .
• Health Screening: Ensuring the health and well-being of migrants may require health
screenings, vaccinations, and medical services, incurring additional costs.
• Social Safety Nets: Governments may need to expand social safety nets to support
vulnerable migrant populations, including refugees and asylum seekers.
Economic benefits through remittances
• Economic Boost: Remittances sent by migrants to their home countries
represent a significant source of income for developing nations.
• Stable and Predictable: Remittances are stable and predictable financial
inflows that provide a consistent source of support for families.
• Local Economy Support: Remittance funds are often spent in local
communities, stimulating small businesses and contributing to the local
economy (Lagakos et al., 2023).
The role of remittances in supporting families in home
countries
1. Economic Stability: Remittances represent a stable source of income for recipient families. They offer a
predictable financial lifeline that can help cover daily expenses, including food, housing, and education
(Lagakos, 2020).
2. Poverty Reduction: Remittances often serve as a powerful tool for poverty reduction. Families in lowincome households can rely on these funds to improve their living standards and access basic necessities.
3. Access to Education: Many families prioritize using remittances to invest in education. These funds
enable children to attend school, purchase educational materials, and access better educational
opportunities, breaking the cycle of poverty.
4. Healthcare: Remittances contribute to improved healthcare access. Families can afford medical expenses,
including doctor visits, medications, and hospital care, ensuring better health outcomes (Lagakos, 2020)..
Skills and Knowledge Transfer
• Brain Gain: According to (Gaspar & Ampudia de Haro, 2020) Some migrants
return to their home countries with acquired skills, knowledge, and
international experience, contributing to the local workforce.
• Technological Transfer: Migrants may bring back technological
advancements and expertise, enhancing domestic industries and
innovation.
• Education Opportunities: Families of migrants may use remittance funds to
invest in education, creating a more skilled future workforce.
Economic Growth
• Increased Investments: (Morgan et al., 2019) posit that migration can
attract foreign investments and businesses to the host country, promoting
economic growth.
• Job Creation: Skilled migrants may create job opportunities through
entrepreneurship and investment in their home countries.
• Foreign Exchange: Remittances increase foreign exchange reserves,
enhancing the recipient nation’s financial stability.
Diverse Workforce
• Productivity Boost: A diverse workforce, including highly qualified
immigrants, can enhance productivity and innovation in developing
countries.
• Innovation and Creativity: Immigrants contribute to a country’s
knowledge base, stimulating patenting activities and fostering
innovation (Kaczan & Orgill-Meyer, 2020).
• International Networking: Skilled immigrants facilitate the exchange of
knowledge, leading to economic growth and development.
Networks and Trade
1.Establishing Networks:
Migrants help build strong networks that ease the movement of goods, knowledge, and resources
between countries (Kaczan & Orgill-Meyer, 2020).
2.Trade Networks:
Skilled migrants can boost investments back home and create trade connections.
3.Technological Dissemination:
Sharing knowledge improves local manufacturing and increases productivity.
Government’s capacity to assure
migrant investors
1. Legal Framework:
Governments should create clear legal systems that protect migrant investors’ rights, including property
rights and dispute resolution (Gaspar et al., 2020).
2. Political Stability:
A stable political environment is key to attracting investors. Governments should ensure stability to avoid
investment uncertainty.
3. Investment Protection:
Migrant investors need guarantees for their investments. Treaties and agreements can offer legal
protection against risks like expropriation.
4. Supportive Infrastructure:
Developing transportation, energy, and telecommunication infrastructures is essential for business support.
Government infrastructure investments facilitate investment (Lagakos, 2023).
Cultural and Social Enrichment
• Cultural Diversity: A diverse migrant population fosters cultural
enrichment, entrepreneurship, innovation, and artistic creativity.
• Intercultural Bridges: Migrants build intercultural bridges, facilitating
international relations and global economic opportunities.
• Social Impact: Migration can positively impact sports, art, and various
forms of accomplishment within the host country (Lagakos, 2020) .
Conclusion
• The research findings indicate that migration in
developing nations is associated with both advantages
and disadvantages.
• Developing nations derive advantages from migrants in
the form of remittances, tax money, and the acquisition
of professional expertise.
• The government can reduce paperwork and provide
financial rewards to help returning migrants settle back
in easily..
Key Findings
Benefits of Migration
•Remittances
•Economic Growth
•Diverse Workforce
•Networks and Trade
•Cultural and Social Enrichment
Costs of Migration
•Brain Drain
•Healthcare Workforce
•Administrative Costs
•Wage Competition
•Social Tensions
Future directions for migration policies in developing
countries
1.Skill Retention and Return:
Developing countries need strategies to keep skilled workers and encourage those abroad to return by offering
incentives like knowledge transfer and investment opportunities (Morgan et al., 2019).
2.Labor Market Integration:
Policies should help migrants enter the job market fairly, balancing competition with local workers and
addressing pay differences.
3.Social Inclusion:
Future policies must focus on making migrants feel included, reducing discrimination to prevent social tensions
(Lagakos et al., 2023).
4.Economic Diversification:
Governments should broaden their economies to lessen reliance on money sent home by migrants and be
more resilient to economic changes.
5.Global Collaboration:
Developing countries should work together globally to tackle migration issues, make better trade deals, and
support migrant rights (Lagakos, 2020).
References
De Haas, H. (2021). A theory of migration: the aspirations-capabilities
framework. Comparative migration studies, 9(1), 1-35.
Kaczan, D. J., & Orgill-Meyer, J. (2020). The impact of climate change on migration: a
synthesis of recent empirical insights. Climatic Change, 158(3-4), 281-300.
Lagakos, D., Mobarak, A. M., & Waugh, M. E. (2023). The welfare effects of encouraging
rural–urban migration. Econometrica, 91(3), 803-837.
Lagakos, D. (2020). Urban-rural gaps in the developing world: Does internal migration offer
opportunities?. Journal of Economic perspectives, 34(3), 174-192.
Oliinyk, O., Bilan, Y., Mishchuk, H., Akimov, O., & Vasa, L. (2021). The impact of migration of
highly skilled workers on the country’s competitiveness and economic growth. Montenegrin
Journal of Economics.
Morgan, C., Knowles, G., & Hutchinson, G. (2019). Migration, ethnicity and psychoses:
evidence, models and future directions. World Psychiatry, 18(3), 247-258.
Gaspar, S., & Ampudia de Haro, F. (2020). Buying citizenship? Chinese golden visa migrants
in Portugal. International Migration, 58(3), 58-72.
Thank You
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