Economic results of migration

One of the most important dimensions of the effect of migrations is the contributions immigrants make to economic development.

Brain drain vs. brain gain

Poor material conditions, known as "push factors", lead to emigration. People leave their homes and cross the borders to migrate to new places with better job prospects and higher wages, necessary to lead a decent and better life. Movements within labour markets in the age of globalization are directed mostly abroad. Young people leave their countries of origin and migrate to host countries.

Last week, following the dispersion of harrowing images of human suffering coupled with increasing public pressure, some previously resistant European leaders began to warm up to the idea of allowing more Middle Eastern migrants into their countries. Many Europeans—notably, those in Sweden, Iceland, the Greek Island of Kos—have been caring for the refugees, acknowledging the probable economic burdens but letting compassion subsume them. Others in Europe, though, hesitate out of fear that migrants will take jobs, threaten social cohesion, and raise welfare spending.

For example (according to European Informer) immigrants from Poland who work in Great Britain produce 1% of its GDP. 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. Also, 42 percent of U.S. immigrants have been shown to contribute to innovations in high-tech fields, accounting for 24 percent of total U.S. patent filings in 2003.

Flow of money and skills

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

For example, the amount of remittances received per year in Pakistan varies from $2 to $3 billion per year (1980s), constituting almost 9% of GDP; in Mexico it is over $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 2007–08 exposed many 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 even more difficult to measure, 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 do not really lead to investments but more to stagnation (according to AIV document).

Entrepreneurs and tourism

Some of the emigrants become entrepreneurs in 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 a form of short-term migration that also contributes to the local economy. In the country of origin travel agencies prosper, enabling people to travel abroad. Tourism destination countries make money by serving tourists, through providing hotels, restaurants, and other attractions. Often prior immigrants start tourist businesses according to their own culture to attract people from their country.

Innovative immigrant entrepreneurs

Immigrant entrepreneurs have made great contributions to innovations leading to economic growth. The high performance of immigrants in innovative endeavors has positively contributed to the overall prosperity of native-born Americans and economic growth.

As at 2012, immigrants in the U.S. account for 18 percent of incorporated businesses. There has been an increased dependence on immigrants for economic growth through innovation, as business creation by native-born entrepreneurs alone is not sufficient.

These immigrant entrepreneurs tend to start businesses in the highly innovative technology and science fields. The contributions of entrepreneurs to business startup across industries reflects a higher rate of startups among immigrants in the fields of engineering, business, investment, and electronics.

In 2005, contributions by these immigrants were estimated to represent 450,000 jobs and $52 billion in economic growth.

Offshoring and outsourcing

Offshoring

Large 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", though similar, refers to the relocation of internal production processes to another company within the same country.