Diaspora and Economy: Effects of Global Economic Slowdown on Remittances
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This document summarizes research on the effects of the global economic slowdown on remittances sent by overseas Pakistani workers. It outlines trends in Pakistani migration and remittances from 2002-2012. While remittance flows to Pakistan held steady during the crisis, some neighboring countries saw declines. Case studies on other countries found impacts ranging from small GDP declines to reductions in household welfare. The document recommends engaging the Pakistani diaspora beyond remittances and aligning migration policy with development goals.
Diaspora and Economy: Effects of Global Economic Slowdown on Remittances
- 1. Diaspora & Economy: Effects of the Economic Slowdown on Remittances Muhammad Sohaib BBRM-10 Sustainable Development Policy Institute 1
- 2. Outline • Introduction • Global Economic Slowdown • Patterns and Trends in Migration • Contributions of Diaspora • Remittances Flow to Developing Countries • Remittances to Pakistan • Some Case Studies • GoP Initiatives • Future Outlook • Overseas Pakistanis: Manifestos of Political Parties 2013
- 3. Introduction • Diaspora • Pakistani Diaspora • Types of Diaspora Labor Diaspora Brain Drain Immigrants • Destinations of Migrants
- 4. Global Economic Slowdown • Global Financial Crisis 2007 • Global Economy Contracted in 2008-2009 • Downturn directly hit the advanced economies • In 2009 GDP per capita turned down in 60 out of 107 developing economies (UN 2010) Source: UN Global Economic Outlook 2012
- 5. Patterns and Trends in Migration There are few jumps and down falls, but there is a big climb started in 2005 0 50000 100000 150000 200000 250000 300000 350000 400000 450000 500000 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total Migrants
- 6. Type Wise Migrants 2000 - 2012 Decline in unskilled migrants 0 50000 100000 150000 200000 250000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Highly Qualified Highly Skilled Skilled Semi Skilled Un-Skilled
- 7. Pakistani Workers Registered for Overseas Employment 2002-2012 Migrant flow to: UAE drops in 2008, Saudi Arabia 2009 and diminishes in Oman in 2009 Data Source: BEOE 0 50000 100000 150000 200000 250000 300000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Saudi Arabia UAE Oman
- 8. Pakistani Workers Registered for Overseas Employment 2002-2012 Decline observed in the case of Khyber Pakhtunkhwa and Punjab 0 50000 100000 150000 200000 250000 300000 Punjab Sindh K.Pakhtunkhwa Balochistan Azad Kashmir N.Area Tribal Area
- 9. Contributions of Diasporas Diasporas contributed in three facets • Remittances • Brain Drain (Brain Drain is a talent mobility; which can bring benefits to both host and home countries) - South Asian Brain Dain - Silicon valley of India (Bangalore) • Role as Intermediaries -Diasporas can connect home countries to foreign investors - Cultural interpreters
- 10. Remittances to Developing Countries Remittances have shown resilience than FDI since the global financial crisis Developing countries received $ 401 billion remittances in 2012(World Bank) In history it can be observe that remittance remained stable (Mexican financial crisis 1995, Asian Market Crisis 1997)
- 11. Remittances to Developing Countries The remittance flows to developing countries in 2006 were 235 $billion and it increased in 2007 with a growth rate of 22.9 percent to 289 $billion, and increased to 338 $billion in 2008 with a growth rate of 16.9 percent
- 12. Top 10 Recipients of Remittances in 2012 69 60 24 23 21 21 14 14 10 7 0 10 20 30 40 50 60 70 80 India China Philipines Mexico Nigeria Egypt Banladesh Pakistan Vietnam Lebnan $USBillion Three South Asian countries are in top 10 recipients Source: World Bank, Migration and Remittance Brief 20
- 13. Workers’ Remittances to Pakistan 2002-2011 Was there no impact of Global Financial Crisis on Remittances? Data Source: State Bank of Pakistan 0 2,000 4,000 6,000 8,000 10,000 12,000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 US$Million
- 14. Some Case Studies Barajas et al (2010) investigated the effect of economic slow down on worker’s remittances of Africa (Many countries were forecast to lose 0.1 to 0.2 percent GDP growth due to fall in remittances in 2009) Ratha. D and Mahapatra. S argued that the global financial crisis has caused decline in remittance flows to low income economies Balan et al (2011) evaluated the remittances and migration flows during the financial crisis in the European Countries
- 15. Some Case Studies Raihan .S (2010) examined the impact of global financial crisis on remittances, exports and poverty in Bangladesh. (He analyzed the negative shock in remittance will result decline in real GDP by 0.1 percent) Raihan. S (2010) explored the impact of global financial crisis on migration and remittances in Bangladesh. (The macro statistics showed positive growth in remittances during the crisis but there were large number of household who faced fall in remittance inflows by migrants)
- 16. Some Case Studies Ahmed et al. (2010) examined the impact of remittances on economy and household welfare (If remittances inflows reduced to 50 percent, the GDP growth declined to 0.7% as a result and investment and imports also decreased to 7.7 percent and 6.4 percent respectively) Ahmed and Sugiyarto (2012) find that improvement of household consumption and investment are positively and consumer prices are negatively associated with remittances
- 17. GoP Initiatives • BOEO is working under the emigration ordinance of 1979 • Overseas Employment Corporation (OEC) • Overseas Pakistanis Foundation (OPF) • Foreign Remittance Card Scheme • Pakistan Remittance Initiative
- 18. Workers’ Remittances from Abroad 2002-2011 • Remittances not affected during and after the crisis – 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
- 19. Future Outlook • Demand Side Factors The flow of remittances will continue to increase in the foreseeable future Pakistani migrants have embarked upon non-traditional workplace destinations as well East is a good Option The banking sector in Pakistan is now viewing the remittances as a major source of business
- 20. Future Outlook • Supply Side Factors EU will remain in recession North America will continue to Maintain its strict visa policies China and East Asia will be future engines for Economic Growth Middle East will continue to diversify away from South Asian Migrants
- 21. Recommendations • Diaspora may be engaged beyond their monetary contributions : in terms of knowledge and technology • Migration Policy needs to be aligned with the Development Policy • Banking Sector can play a vital role • Role of Overseas Pakistanis Division needs to be revisited
- 22. Overseas Pakistanis: Political Parties Manifestos 2013 • Pakistan Muslim League – N • Pakistan Tehreek-i-Insaf • Pakistan Peoples Party • Pakistan Muslim League - Q • Muttahida Qauami Movement