Diaspora & Economy: Effects of the Economic Slowdown on Migration & Remittances

1. Diaspora & Economy: Effects of the Economic
Slowdown on Migration & Remittances
Dr. Vaqar Ahmed
Sustainable Development Policy Institute
Islamabad Policy Research Institute – 15 November 2012
1

2. Outline
• Patterns and Trends in Migration
• Remittances Vs. Migration flow
• Demand Side vs. Supply Side of Remittances
• Countering Dutch Disease
• Aligning migration policy with development priorities

3. Pakistani Workers Registered for Overseas Employment
2002-2012
900000
800000
700000
600000
Numbers
500000
400000
300000
200000
100000
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Migrant flow starts to diminish in 2008 but still rising, however it plummets in 2009

4. Pakistani Workers Registered for Overseas Employment
2002-2012
300000
Saudi Arabia
250000
200000
Number
150000 UAE
100000
Oman
50000
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Migrant flow to: UAE drops in 2008, Saudi Arabia 2009 and diminishes in Oman in 2009

5. Pakistani Workers Registered for Overseas Employment
2002-2012
250000
200000
150000 Highly Qualified
Number
Highly Skilled
100000 Skilled
Semi Skilled
50000 Un-Skilled
0
2000
2011
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Regressive Impact: Decline in unskilled migrants was relatively greater 2012

6. Pakistani Workers Registered for Overseas Employment
2002-2012
300000
250000
Punjab
200000
Sindh
Number
150000 K.Pakhtunkhwa
Balochistan
100000
Azad Kashmir
50000 N.Area
Tribal Area
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Khyber Pakhtunkhwa and Punjab saw the largest decline

7. Workers’ Remittances from Abroad
2002-2011
12,000
10,000
8,000
US $ Million
6,000
4,000
2,000
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Does this imply that there was no impact of Global Financial Crisis on Remittances?

8. Workers’ Remittances from Abroad
2002-2011
• Why were Remittances not affected?
– Traditional migrant economies in Middle East remained
insulated (except UAE)
– Indian Diaspora in Middle East was a lesser competition
given the appreciation of Indian currency
– The weakening of Pakistani currency implied that
Diaspora’s consumer surplus increased when purchase was
made locally
• Remittances could have been higher in the event of
no global financial crisis (how much?)

9. Workers’ Remittances: Futuristic Outlook
Demand Side
• Most believe that the flow will
continue to increase
• With tightening of regulations in
US and Continental Europe,
Pakistani migrants have
embarked to untraditional
destinations too
• For Diaspora weak Pakistani
currency implies a buyers’ market
in Pakistan
• Banking sector in Pakistan
envisaging targeted financial
instruments for Diaspora

10. Workers’ Remittances: Futuristic Outlook
Demand Side Supply Side
• Most believe that the flow will • EU region will remain in recession
continue to increase for medium term
• With tightening of regulations in • North America will maintain
US and Continental Europe, stringent visa regime and work
Pakistani migrants have approvals
embarked to untraditional • Middle East will continue to
destinations too diversify away from South Asian
• For Diaspora weak Pakistani migrants
currency implies a buyers’ market • Look East – may be an option!
in Pakistan • Pakistanis losing on opportunities
• Banking sector in Pakistan associated with Chinese proximity
envisaging targeted financial
instruments for Diaspora

11. Workers’ Remittances and Dutch Disease
• Is a Remittances-led welfare model sustainable?
– Kerala's example not very encouraging
• What about Dutch Disease?
Increasing Appreciates Curtails Increase in
Hurts Exports
Remittances Exchange Rates Production Unemployment

12. Countering Dutch Disease
• Engaging Diaspora beyond monetary contributions
– Knowledge and technology transfer
• Banking sector instruments: Going beyond Pakistan
Remittances Initiative
• Directing remittances towards higher multiplier and value
added activity
• Caution: Government cannot do sector picking, however it
can create a level playing filed for all sectors
• Example: Indian Diaspora’s own budget airline for Indians in
Middle East (workers’ class). Pakistan’s Sialkot Chamber of
Commerce engaging Diaspora for Municipal Investment

13. Aligning Migration Policy with
Development Policy
• Framework for Economic Growth Silent on Migration /
Remittance Prospects
• What about Federal Budget  Can it be a short term
instrument for leveraging remittances?
• Overseas Pakistan’s Division

14. Thank You
www.sdpi.org, www.sdpi.tv
vaqar@sdpi.org 14