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BOARD OF EXECUTIVE DIRECTORS OF THE WORLD BANK
Dear Officials,
It is a pleasure to welcome you to the Board of Executive Directors of World
Bank. Considering the huge success of the committee in the three last editions of
UFRGSMUN, once more it will be simulated. The idea of the Board is to give the
chance of dealing with economic issues interrelated with other areas, such as
international politics, which is a different opportunity to interact in the simulation.
This year the main areas contemplated in the World Bank are economics and
social policies related to migrants and remittances impact on world economy. The staff
is composed by five members, and we have been working through all the year to give
the necessary information for officials to have a profitable discussion.
Caio Mascarello Teixeira is an UFRGSMUN enthusiast. This 8th semester
Business Administration student from UFRGS was World Bank assistant director in
2007 and World Bank director in 2008. Caio’s areas of interest range from Conflict
Management to Sustainable Development. He has participated three times as a delegate
in models UN: in the UFRGSMUN 2006 representing Mozambique at UNCTAD, in the
AMUN 2007 as a British ambassador at the ECOFIN, and in the UFRGSMUN 2009
representing Mauritius at The Board of Executive Directors of the World Bank
Lídia Brochier graduated in International Relations at UFRGS in 2009. She
participated in the UFRGSMUN 2008 as an official – representing Mexico delegation –
at the Board of Executive Directors of the World Bank and in the UFRGSMUN 2009
she took part of the academic staff as an assistant director at the World Bank. Her major
fields of interest are International Political Economy and Macroeconomics.
Fernanda Barth Barasuol is at her 8th semester in International Relations at
UFRGS. She participated in UFRGSMUN 2008 at Sochum representing the delegation
of Mexico. Her areas of interest are International politics and International economy.
Mário Augusto Sogari is currently at his 8th semester in International Relations
at UFRGS. He participated in previous editions of the UFRGSMUN's World Bank
Committee in 2008 and 2009, when he represented, respectively, the delegation of
Belgium and the delegation of Saudi Arabia. Mário's areas of interest include Asian
Studies, regarding Politics and Economics, and International Security affairs.
2 ufrgsmodelunitednations2010
Thomás Dorigon is at his 4th semester in International Relations at UFRGS. In
2009 he had a great experience working as a member of UFRGSMUN administrative
staff. This year he is interested in taking part of the model as a member of the World
Bank, in order to improve his knowledge about this UN body and about the topic which
is going to be discussed: Migration and Remittances. His range of interest encompasses
from culture and political organization to impacts of economic crises on daily life.
We sincerely hope you have a great experience at UFRGSMUN and we are
looking forward to meeting you!
Caio Mascarello Teixeira Lídia Brochier
Director Director
Fernanda Barth Barasuol Mário Augusto Sogari Thomás Dorigon
Assistant director Assistant director Assistant director
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INTRODUCTION
The World Bank
Created following the ratification of the Bretton Woods Agreement, at the end
of World War II, the World Bank is an association of five development institutions. The
two main ones are the International Bank for Reconstruction and Development (IBRD)
and the International Development Association (IDA); the other are the International
Finance Corporation, the Multilateral Guarantee Agency, and the International Centre
for the Settlement of Investment Disputes.
The World Bank is composed by 185 shareholders, who take part in two main
decision organs: the Board of Governors, which is the ultimate police maker and is
composed by all members, and the Board of Executive Directors, which has specific
duties delegated by the Board of Governors.
There are 24 representatives in the Board of Executive Directors. Each of the
five largest shareholders, which are France, Germany, Japan, the United Kingdom and
the United States, appoints one executive director, while each of the other 19 executive
directors represents a group of the remaining members. The Board is responsible for
creating the Bank's general policies, including loans, country assistance strategies and
financial decisions.
From the post-war reconstruction, which was the objective of the Bank to
Reconstruction and Development, the goal of the World Bank evolved to a wider
proposal. Nowadays, the Bank sees the reconstructions as just a part of its work,
focusing mainly on poverty reduction, sustainable growth and development. The World
Bank is deeply concerned about the global issues mostly regarding the achievement of
the Millennium Goals.
4 ufrgsmodelunitednations2010
MIGRANTS AND REMITTANCES IMPACT ON WORLD ECONOMY
By Caio Mascarello Teixeira, Lídia Brochier, Fernanda Barth Barasuol,Mário Augusto
Sogari and Thomás Dorigon.
1. HISTORICAL BACKGROUND
Migration has always been a central part of human history. Especially after
Europeans arrived in the Americas, international migration has been a vital element in
the economic and social development process. However, from the colonization of the
New World starting in the 16th century, to the migration of workers during the 19th
century, to today’s flow of immigrants from less developed to developed countries, the
characteristics of international migration have varied widely and continue to puzzle
theorists as to its causes and consequences.
The last three decades have experienced a steady increase in migrations, and in
2005 the number of international migrants amounted to 188 million (TAYLOR, 2006).
This raises a number of concerns regarding the economic effects of international
migration in both countries of origin and destination, but also in regard to the
assimilation of migrants in the receiving country’s society – which can prove to be a
challenging process.
As migration becomes a more and more complex issue it is vital to look back
into the historical process that led to this unprecedented amount of international
migrations as well as into the theories that have tried to understand it.
1.1. Theories
There are several theories concerning international migration. Most of them
focus on trying to explain what leads workers to migrate, using different explanatory
tools. Some of them concentrate on economic aspects, others on historical and structural
dynamics and some on cultural factors. “At present there is no single, coherent theory of
international migration, only a set of theories that have developed largely in isolation
from one another” (MASSEY et al, 1993, p. 432). However, even though these theories
might seem to have competitive answers, it is advisable to see them as different pieces
that combined form a more comprehensive picture of international migration.
5 ufrgsmodelunitednations2010
The first theories concerning international migration were economic ones.
These theories derived from the neoclassical theory of economics, and used its two
most important tools to try to explain migration: the rational behavior of actors and the
balance between offer and demand. The neoclassical theory was inspired by the
migrations of the 19th century, which comprised most of European workers migrating
to the New World as a means to alleviate demographic pressures on origin countries and
search for better opportunities.
By studying these migration movements, neoclassical theorists such as Lewis,
Todaro, Borjas and Chiswick developed a theory around “push and pull” factors. The
“push” factors were factors of repulsion, which led workers to emigrate, such as
population growth, low life standards, lack of opportunities and political repression. The
“pull” factors, which attracted immigrants to a particular country, were demand for
workers, availability of land, good opportunities and political freedom (FONSECA,
2007).
As can be seen, according to the neoclassical theory, the main factor leading to
migration is the availability of jobs or other economic opportunities. Population growth
would lead to a larger offer of labor force and this surplus would then migrate to
countries where the demand for labor was higher and therefore salaries would also be
higher. As rational actors, according to the neoclassics, workers would continue to
migrate in search of better gains until a balance was reached between wage levels in
countries of origin and destination (FONSECA, 2007).
Another economic perspective on migration is offered by the new economics
of migration. This theory mostly complements the neoclassical theory, adding to it new
factors, such as collective decision (by a household instead of an individual) and the
matter of remittances. Its main proponents are Oded Stark, J. Edward Taylor and
Shlomo Yitzhaki (MASSEY et al, 1993).
The authors of the new economics of migration theory propose that
households try to diversify the allocation of their resources - and sending family
members to work temporarily in another country is a way to do that. The migrant family
member, through remittances, would than represent a form of “insurance” in the case of
economic hardships in the country of origin (FONSECA, 2007).
Another factor contributing to migration according to the new economic theory
would be the lack of social mobility in countries of origin. The remittances sent by
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family members abroad, or the capital acquired by temporary work on a foreign
country, would provide the means to overcome capital constraints and therefore make
investments that might enable social ascension (DESA, 1997).
Also using economic tools but offering a different approach, the segmented
labor market theory, developed by Piore, defends that international migration is a
consequence of the demands of modern society’s labor markets. The central argument
of this theory does not focus on the decisions of migrants but on the structure of labor
market in the receiving countries. These markets, it suggests, are divided into two
sectors. The first of these sectors is capital-intensive and offers positions for skilled
professionals, which are filled by nationals. The second sector offers lower wages for
unqualified workers and – since nationals refuse to occupy these positions – is filled by
migrants. Consequently, there will always be a need for migrant workers to occupy
those jobs nationals reject (FONSECA, 2007; DESA, 1997).
Parting from the traditional economic approach, the historical-structural
perspective was developed based on the world-system theory of Immanuel Wallerstein.
The authors of this theory, such as Portes and Walton, Elizabeth Petras and Ewa
Morawska, defend that migration is a natural consequence of the growing economic and
political inequalities between the center and the periphery of the international system
(MASSEY et al, 1993).
The first concern of the historical-structural theorists was the “brain drain”, the
flow of high-skilled professionals from the periphery to the center. This would represent
a loss of human capital that would hinder the development of the countries of origin.
Subsequently, the historical-structural approach focuses on migration as a
whole, and concludes that it is a natural consequence of the expansion of the capitalist
system to non-capitalist and pre-capitalist societies. An important facet of the
penetration of capitalism into these societies would be the one represented by the media.
Through television, cinema and the internet, the countries of the center would create
among the populations of the periphery an image of the lifestyle of the developed
countries as an ideal to be chased, thus encouraging migration (FONSECA, 2007).
Finally, the migratory systems theories offer two complementing approaches:
the social networks theory and the cumulative cause theory. The social networks
theory, defended by authors such as Douglas Massey, is based on the existence of
interpersonal connections between new migrants and established migrants. These
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connections may be of blood, friendship or simply of a common nationality. What the
theory suggests is that the existence of networks that provide assistance for new
migrants lowers the risks of migrating, and thus makes it more appealing and more
likely to happen.
The cumulative cause theory, developed by Myrdal, suggests that an original
migration flow can create a sort of chain effect by affecting the decision of other
nationals on whether to migrate or not. Therefore, there is the creation of a “migration
culture” that tends to perpetuate the flow of migrants from a country of origin towards
the same receiving country – sometimes to a specific region in the country of
destination (FONSECA, 2007; DESA, 1997).
Bearing this in mind, it is desirable to understand migration as a phenomenon
caused not only by one isolated factor, but also by an association of many factors,
manly economic and political ones.
1.2. Historical Evolution of Migration
Migration has been a vital element in the development of most – if not all –
societies. That being said, “although humankind has always been migratory, large
intercontinental migration began in the sixteenth century during the age of European
expansion” (DESA, 2004, p. 35). It is also interesting to note that, if migration has been
a constant, the reasons that lead to the choice of migrating have varied through time. In
fact, one of the largest flows of international migration was not a choice at all. Along
with the European population sent to the New World between the 16th and 19th
centuries, a large population of African slaves was forcefully transferred to the
Americas. Between 1700 and 1850 at least 10 million Africans were transported to the
American continent to work as slaves (DESA, 2004). It was the end of the slave trade
that gave impulse to a new flow of migration of European workers looking for a better
life in the New World, which would be a central element of development during the first
global century.
1.2.1. 1820-1920: the first Global Century
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The period known as the first Global Century began with the end of the
Napoleonic Wars and ended along with the First World War1. It was a period of
unprecedented freedom of movement of goods, capital, and labor. In Western Europe
and North America it was also characterized by economic growth and rapid
technological progress (FONSECA, 2007).
In Europe, improvements in nutrition, hygiene and preventive medicine
contributed to population growth. Combined with the effects of the Industrial
Revolution, this resulted in the existence of a considerable labor surplus in the
continent. At the same time, technological innovations in transportation, in terms of
both transoceanic shipping and transcontinental railways led to a decline in
transportation costs. These factors, combined with a demand for labor created by the
end of the slave trade, gave impetus to migration, which increased significantly.
The greatest incentive to migration, however, was possibly the large wage gap
between countries of origin and destination.
Until 1890 most migrants were from the United Kingdom and Germany:
between 1815-1924, 18 million British individuals and 5 to 6 million Germans
emigrated overseas. During this period the Scandinavian countries also were an
important origin of migrant workers. From the 1890s on migrants from Southern,
Central and Eastern Europe became dominant, especially from Italy, Poland, Portugal,
Spain and the Russian Empire. This change was largely influenced by the raise in wages
in both the United Kingdom and Germany. It also coincides with the migration boom
that occurred towards the end of the 19th century. Between 1821-1850 the average
annual number of migrants in the main countries of destination was 188.000. Between
1881-1915 it reached 1.047.000 migrants (DESA, 2004).
The main destinations for migrants remained the same throughout the 1820-
1920 period: the United States, Canada, Argentina and Brazil. The United States was
the preferred destination, especially among British immigrants: 3/5 of British migrants
went to the US. (DESA, 2004).
1 The “first Global Century”, also referred to as the first era of mass migration, is a term generally used as a means of comparison with the current (second) global century. Although it is not clear who coined the term, it is largely used and accepted in international migration literature. For examples see DESA (1997; 2004), FONSECA (2007), TAYLOR (2006). For a comparison of the two global centuries see HATTON and WILLIANSOM (2006) or WILLIANSOM (2002).
9 ufrgsmodelunitednations2010
Destinations in South America, specially Brazil and Argentina but also Chile
and Uruguay, received mostly immigrants from Southern, Central and Eastern Europe.
Between 1870 and 1930 around 4 million European workers immigrated to Brazil, and
about 2 million to Argentina. An important factor of attraction of immigrants to these
countries was the State policies created with this purpose, such as subsidies and
distribution of land. Although other countries did not receive many European
immigrants, some of them received workers from other regions, sometimes in a coolie
system2. Peru, for example, received a large contingent of Chinese workers, and in 1877
the Chinese represented 2% of the country’s population. (BETHELL, 2005).
The United States was the country which received the highest number of
immigrants during the 1820-1920 period. However, since it already had a large
population, the demographic growth due to immigration in the US was not as significant
as in other countries. On the other hand, only between 1870 and 1910 Argentina
experienced an increase of 60% of its population and 86% of its workforce (DESA,
2004).
In the beginning of the 20th century the United States decided to impose more
restrictions on immigration. In 1907 the Immigration Act established a tax of US$4 per
immigrant. In 1917 this tax was raised to US$8 and a literacy test was now imposed as a
condition to enter the country. These Acts reflected broader changes in American public
opinion against immigrants, especially those from Southern, Central and Eastern
Europe, which the US population found harder to assimilate due to cultural differences.
In accordance with this view, the 1921 Emergency Quota Act limited the number of
immigrants to 3% of the population of each nationality currently residing in the US.
These measures, along with the First World War, represented the demise of the north-
north migration, which had been a central part of the development of the first global
century.
Although not all countries decided to adopt restrictive measures – and in fact
Brazil and Argentina were still recruiting immigrants – the beginning of the war made
migration increasingly difficult. The number of migrants fell steeply during the conflict.
Argentina, which had received nearly 500 thousand immigrants in the period of 1911-15
only received 2.4 thousand between 1916-1920 (BETHELL, 2005). 2 The coolie system consisted of “the transportation of workers, often over long distances, to perform agricultural or infrastructural work at destination under a variety of binding contract arrangements, all of which involved the obligation to work for the contractor for a period of time” (DESA, 2004, p.35).
10 ufrgsmodelunitednations2010
1.2.2. 1920-1980
Although migration increased again in the early 1920s, this recovery proved to
be temporary. During the 1930s the combination of restrictive policies and the
economic crisis that affected both countries of origin and destination discouraged
migration. During the whole period between the 1929 economic crisis and the end of the
Second World War migration was extremely limited. Although it could be argued that
some countries in the south still received a considerable amount of migrants, they
represent an exception in the general tendency of decline in migration.
After the end of the Second World War in 1945 migration regained momentum
due mostly to the economic growth in developed countries. The reconstruction process
and subsequent economic expansion transformed Europe in a destination for
immigrants.
The economic prosperity of the developed countries also encouraged their
governments to adopt less restrictive policies in regard to immigration. This provoked a
change in the origin of migrants, who now came mostly from recently independent
countries in Asia and Africa, and Latin America. Three types of migration movements
became predominant: temporary migrations from the countries in the European
periphery towards Western Europe; migration of workers from the former colonies
towards their former metropolis; and permanent migrations to North America and
Australia (FONSECA, 2007).
An important migration flow that gained impetus in this period was that of
Mexican workers to the United States. In 1942 started the Bracero Programme, which
allowed the entrance of temporary Mexican workers into the country, mostly to help
with the war effort. Although the programme ended in 1964 “the number of unskilled
migrant workers from Mexico living in the United States had increased significantly
both as a result of admissions under the Programme and because of the undocumented
migration that developed parallel to it” (DESA, 2004, p.55).
A similar process took place between Turkey and Germany. In the 1960s, faced
with the rapid growth of its population, Turkey signed a series of Agreements with
several European countries which allowed Turkish workers to migrate temporarily to
those countries. Although such Agreements were signed with six countries (Germany,
11 ufrgsmodelunitednations2010
Belgium, Austria, the Netherlands, France and Sweden) about 80% of all Turkish
workers to emigrate chose the same destination: Germany. The official labor
recruitment ended in the early 1970s, but migration did not stop. Rather, it changed,
being now characterized by two types of flows: one of family members of those workers
who had migrated legally through the agreements, and one of workers who continued to
migrate – now illegally (Focus Migration, 2006).
In sum, the period of 1920-1980 was mostly an interval between two periods of
intense migration flows. The first one occurred during the first Global Century, and the
second started in 1980 and still continues. It was during the second period, however,
that crucial changes occurred, especially regarding the origin and destination of
migrants, who now came mostly from developing countries to the developed world.
1.2.3. 1980-2010: the new migration boom
Migration flows started to become increasingly significant in the 1960s, when
the number of migrants reached 76 million worldwide, but it was in the 1980s that it
reached the mark of 100 million migrants worldwide. During this decade, the annual
rate of growth in the number of migrants reached its peak: 4.3% (DESA, 2004).
The most important factors leading to this new migration boom are the
growing interdependence among countries, the continued and even growing income disparities between them, cheaper and more accessible means of transportation, and growing demographic disparities, particularly between the developed and the developing world (DESA, 2004, p. 56).
The new migration boom is even more impressive than that occurred between
1820 and 1914. In 1910, at the peak of the first boom, 1 out of every 48 persons was an
international migrant; in 2000, 1 out of every 35 persons was a migrant, representing a
total of 175 million persons living outside their country of birth (DESA, 2004).
Although the first Global Century and the period after 1980 are both periods of
intense migration, the characteristics of these migration movements vary widely:
In the nineteenth century, European countries were able to export the surplus labor that had resulted from their agrarian and industrial revolutions and their demographic transition to countries that needed to increase their workforce and their population. This option is not open at present to developing countries experiencing high unemployment and underemployment rates. Likewise, there is no country ready to accept large numbers of immigrants for settlement (DESA, 2004, p. 53).
12 ufrgsmodelunitednations2010
One major difference between the migration booms is the current existence of
restrictive measures on migration in most countries, especially those who are main
destinations for immigrants. The proposition of governments that implement policies
with the intent of lowering migration has increased steadily since the 1970s. In 1976
only 6% of governments had such policies; in 1986, 19%; and in 1995, 33% (UN,
1997). Most developed countries have policies to control migration, such as the
extensive control of the countries borders, a restricted access to visas and the limitation
of a migrants’ access to employment. Some countries have more repressive policies.
The United States, for example, have criminalized the hiring of undocumented workers
and restricted the access of legal migrants to public benefits, such as food stamps
(Migration Policy Institute, 2005).
Despite these measures, and in some cases due to their existence, the latest
decades have also shown an increase in the number of undocumented migrants – in
2000 there were 7 million unauthorized immigrants in the United States alone (DESA,
2004).
The concentration of migrants in developed countries has also increased: while
in 1960 42% of international migrants lived in developed countries and 58% in
developing countries, in 2000 the numbers were respectively 63% and 37%. Although
these rates may not seem impressive, they become more significant if one considers the
difference in populations of the developed and developing countries. In 1990,
international migrants constituted 4.5% of the population in more developed regions and
1.6% of that in less developed regions. Furthermore, the ratio of net migration rate to
population growth rate in the period of 1990-1995 was of 45% in developed regions and
–2.8% in less developed regions (DESA, 2004)3.
In sum,
although developing countries as a whole have been consistently losing population because of international migration, their overall rate of natural increase is still so high that net emigration has had only a small impact on population trends (DESA, 2004, p.64).
On the other hand, international migration has been significant in maintaining
population growth or, in some cases, preventing population reduction in the developed
world. Europe, for example, would have experienced a population decline of 4.4 million
3 The net migration rate in 1990-95 in more developed regions was 1.8 per 1.000 and in less developed regions –0.5 per 1.000. In the same period the population growth rate was of 4.0 per 1.000 in more developed regions ad 17.6 per 1.000 in es developed regions.
13 ufrgsmodelunitednations2010
between 1995 and 2000 if not for the entrance of 5 million immigrants into the
continent.
Apart from traditional destinations such as the United States and Western
Europe, other regions have experienced an important growth in international migration.
In South Eastern and Eastern Asia, the main destinations are the newly-industrialized
countries (India, Malaysia and Thailand) and Japan. It is noteworthy, though, that most
of the immigration in these countries is undocumented. In the Persian Gulf, more
specifically the member-countries of the Gulf Cooperation Council (GCC)4, a large
portion of the labor needed for the building of infrastructure was brought in from other
countries. In 2000, between 25 and 70 per cent of the populations of the GCC countries
were foreign-born (DESA, 2004).
Alongside international migrations, remittances sent to countries of origin by
migrants also increased significantly during this period – and in fact, they have
increased more rapidly than the number of migrants. In 1970 remittances amounted to
US$2 billion, in 1989 they reached US$61 billion and in 2004 remittances amounted to
US$216 billion. About 70% of all remittances go to less developed countries,
representing for some of them their most important source of foreign exchange (DESA,
1997; TAYLOR, 2006).
2. STATEMENT OF THE ISSUE
2.1. Introduction on Migration and Remittances
The movements of migration and remittances related to it have become an
increasingly important part of globalization. They have impacts both on host and origin
countries. Besides, it is important to consider that trade policies and international
agreements have influence over these flows.
The analysis of migrations and the amount of remittances are considered of high
complexity due to its current situation, and efforts are needed to figure out possible
solutions.
4 The Gulf Cooperation Council is an organization with economic and social objectives, whose members
are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. More information at http://www.gcc-sg.org/eng/ Last access: August 17, 2010.
14 ufrgsmodelunitednations2010
2.1.1. Concept of Migration
According to the Human Migration Guide (HMG, 2005), migration of human
beings is the movement of people from one place in the world to another for the purpose
of taking permanent or semi-permanent residence, usually across a political boundary.
In this sense, migrants are people who integrate these movements, moving from one
country, where they have residence, to another country5.
Migrants can be divided in two kinds: long-term migrants and short-term
migrants. Long-term migrants are people who move to a country other than that of
his/her usual residence for a period of at least a year, so the country of destination
effectively becomes his/her new country of usual residence. Short-term migrants are
people who move to a country other than that of their usual residence for a period of at
least three months but less than a year6 (WB, Migration and Remittances Factbook,
2008).
2.1.2. Types of Migration
When we focus on migration and development, almost all kinds of migration
have their impacts, being them positive or negative.
Forced migration happens when a government forces a large group of people
out of a region, usually based on ethnicity or religion (HMG, 2005).
Chain migration is the case when a series of migration occurs within a family
or defined group of people, and often begins when one family member sends money to
bring other family members to the new location. Chain migration results in migration
fields (HMG, 2005), which are associated with the so-called Diaspora (WB, 2008). A
Diaspora is characterized when migrants move to migrant communities in one or more
receiving countries while maintaining strong social, business and political ties with the
5 It is important to make clear that we are conceptualizing what is called international migration (it is different from internal migration which does not involve a displacement from country to country). 6 Short-term migration does not entail cases where the movement to a country is for purposes of recreation, holiday, visits to friends and relatives, business, medical treatment, or religious pilgrimage.
15 ufrgsmodelunitednations2010
sending country, and usually forming transnational networks through which money,
goods, ideas and people flow (O’NEIL, 2003; SKELDON, 2007).
Return migration or Circular migration is probably the most relevant
movement for developing countries: it grips the voluntary movements of immigrants
back to their place of origin (HMG, 2005). A growing proportion of migration is
circular, occupying a central place in policy and discussion on migration (O’NEIL,
2003).
Skilled migration is associated with the brain drain and is usually understood as
a synonymous with legal, permanent migration, as developed countries compete with
each other to fill structural labor shortages in an increasingly knowledge-based
economy (DRC, 2003).
Last, irregular migration refers to a broad group of migrants that includes
migrants who enter countries illegally, failed asylum seekers, migrants who overstay
their visas, and those who have legal right to remain in the country but work illegally.
Exact numbers of irregular migrants are difficult to estimate, but it is clear that irregular
migration occurs on a large scale and is a global phenomenon (SWARD; SABATES-
WHEELER, 2008).
2.1.3. Concept of Remittances
Migrant remittances can be broadly defined as monetary transfers that migrants
make to their country of origin. In other words, remittances are financial flows
associated with migration (IOM, 2006). More specifically, remittances refer to the
portion of migrant income that, in the form of either funds or goods, flows back into the
country of origin, primarily to support families back home (HERTLEIN; VADEAN,
2006).
The World Bank defines remittances as the sum of workers’ remittances,
compensation of employees and migrants’ transfers (WB, 2008). This is based on the
definition of the International Monetary Fund (IMF), which divides remittances in three
categories: Compensation of employees (i.e. gross earnings of workers residing abroad
for less than 12 months); workers’ remittances (i.e. the value of monetary transfers sent
home by workers residing abroad for more than one year); and migrants’ transfers (i.e.
16 ufrgsmodelunitednations2010
net wealth of migrants who move from one country of employment to another)
(HERTLEIN; VADEAN, 2006).
2.1.4. Remittances: motivations and role of the flows
Several are the migrants’ motives for remitting, but three apparently separate
motivating factors can be observed. First of all, migrants are concerned towards family
members still in the country of origin, who rely on the support of the migrant who
assumes the role of provider. Secondly, self-interest can also be a significant motive to
remit – family may look after any property the migrant has left behind. At last, relatives
often cover the high cost of moving and settling abroad and are later repaid once the
migrant has established himself in the destination country (HERTLEIN; VADEAN,
2006).
Interestingly, there is also a correlation between the duration of stay abroad and
the size of remittances. Temporary migrants who leave their families in the country of
origin tend to remit the highest sums in relation to their incomes. On the other hand,
permanent emigrants generally migrate with their family members. Consequently, over
time they have less and less contact with remaining relatives at home, which gradually
reduces remittances. Besides, a change in status from undocumented to legal migrant
often leads to a rise in the value of remittances, due to improved wage levels. However,
these increases in remittances decline again as the migrants integrate themselves into the
host society – mainly because they find themselves able to bring their families to the
host country, what obviously means diminishing remittances flows to the origin country
(HERTLEIN; VADEAN, 2006).
Remittances have grown both in nominal terms and in relation to source
countries’ Gross Domestic Product (GDPs), far outpacing growth in official
development assistance. According to the World Bank, recorded remittances flows
doubled between the year 2000 and the year 2005.
Furthermore, remittances are more unwavering than foreign investments.
Besides, they can be countercyclical, contributing to the stabilization of the economy.
Thus, more countries are looking to remittances as a development tool. After
foreign direct investment and trade-related earnings, remittances are the largest financial
flow into developing countries. This information reinforces the role of remittances as a
17 ufrgsmodelunitednations2010
more stable source of income for households in origin countries – the flow of
remittances is less influenced by economic downturns7 (O’NEIL, 2003; WB, 2010;
ALFIERI; HAVINGA; HVIDSTEN, 2005).
Skeldon (2007) emphasizes that remittances can contribute to the reduction of
poverty and unemployment, and to the improvement of the quality of life in
communities of origin. In opposition, remittances can also exacerbate inequalities both
within communities and between regions.
To make the notion of how remittances flow more tangible, it is useful to
mention the top 10 recipients of migrant remittances (in USD) among developing
countries in 2008. They are, in decreasing order: India, China, Mexico, Philippines,
Poland, Nigeria, Egypt, Romania, Bangladesh and Vietnam. And also the top 10
remittance-sending countries (in USD): United States, Saudi Arabia, Switzerland,
Germany, Russian Federation, Spain, Italy, Luxemburg, Netherlands and Malaysia
(RATHA; MOHAPATRA; SILWAL, 2009a).
2.2. Migration and Development
There is a continuous debate on the impacts of migration on development, both
on developing and developed countries.
On the one hand, development is the alleviation of poverty and migration
clearly contributes to this. Migration that results in remittances raises the income of
families of migrants and sustains many poor households. Much of that additional
income is spent on debt repayment, housing, food, and basic health care and education.
Thus, in some extent, migration and remittances contribute to the progress of the
economy and the social development in origin countries (O’NEIL, 2003).
On the other hand, development entails long-term structural change:
improvements in knowledge, human capital, and infrastructure, and creation of efficient
and accessible markets, governments, public services, and other institutions. When we
consider this point of view, the effects of migration become blurred. Some analysts
worry that migration, rather than promoting structural changes needed for development,
7 The authors, when refer to remittances as being less vulnerable, are usually making a comparison with IDEs flows.
18 ufrgsmodelunitednations2010
may actually delay them while creating unsustainable local and family economies
(O’NEIL, 2003).
An issue upon which there is larger agreement is the direction of public
policies on the matter: stopping migration is neither possible nor desirable. Policies
intended to stop undocumented immigration inflows may cause undocumented migrants
to spend longer amounts of time in the host country and encourage them to bring their
families (O’NEIL, 2003). For both sending and receiving countries, efforts to limit or
control overall levels of migration too often result in limited success and unforeseen
consequences (SKELDON, 2007).
Also, migration is a ‘normal’ feature of human populations and an integral part
of development (SKELDON, 2007). But development policies will not resolve the
question of migration. Migration flows change in volume, direction and composition
over time and in tandem with some type of development. In this sense, policies that are
designed to optimize the benefits of existing flows are more likely to promote
development.
There should be focus on
maximizing the development benefits of migration by increasing the positive impacts of remittances and taking advantage of the learning and business opportunities offered by circular migration and the transnational connections that migrants create (O’NEIL, 2003).
Little has been said about cultural effects of migration. However, it is generally
accepted that it has impacts over origin and host countries. Human migration affects
population patterns and characteristics, social and cultural patterns and processes,
economies, and physical environments. As people move, their cultural traits and ideas
diffuse along with them, creating and modifying cultural landscapes (HMG, 2005).
2.2.1 Impacts on Countries of Origin
For decades the migration debate has focused on the impact of immigration on
destination countries. Very recently, however, attention has increasingly turned to the
situation in the countries of origin, developing countries in particular, with a focus on
the interplay between development and migration (HERTLEIN; VADEAN, 2006).
Focusing first on positive impacts, it can be said that circular migration can
create, at a minimum, the potential for increased knowledge exchange, if not gain
19 ufrgsmodelunitednations2010
(‘brain gain’). Also the Diaspora communities can serve as a conduit for developing
trade connections, increasing transfers of capital and exchanging technology
(SKELDON, 2007).
The steady growth of remittances can help reducing poverty in recipient
communities. However, what is more agreed is that remittances on individual recipient
household incomes can be seen as having favorable impacts, at least in the short-term.
For instance, Mexican households benefit largely from remittances. In 2004, the influx
of remittances represented 47% of the family income in this country (HERTLEIN;
VADEAN, 2006).
An example of how the countercyclical role of remittances can have good
impacts on origin countries is the one given by the Philippines. During the 1997-98
Asian Financial crisis, this country avoided a recession solely through the surge of
remittances, which sustained domestic consumption and helped the country overcome a
slump in exports (HERTLEIN; VADEAN, 2006).
The stability of remittances may reduce the probability of investors fleeing;
they can contribute to financial deepening if the institutional environment is proper and
increase a country’s access to international capital markets (WB, 2010). Over the fields
of health and education, the most important migration-related benefits – besides
increased financial support – are the heightened awareness and knowledge of these
issues that migrants gain by living abroad (HERTLEIN; VADEAN, 2006).
Summarizing, additional income from remittances has positive effects on poverty
reduction, consumer spending and investment, however the impacts of remittances on
income distribution varies case by case (HERTLEIN; VADEAN, 2006; WB, 2010;
IOM, 2006).
It is also essential to take into consideration the negative impacts of migration
and remittances in origin countries. In countries that suffer from human capital
shortages, skilled migration can reduce the capacity to deliver key services (WB, 2010).
Another problem is that remittance fees are unnecessarily high and place a
disproportionate burden on the poor migrants, who tend to send money in smaller
amounts to origin countries (WB, 2010).
Finally, Skeldon (2007) stresses that promoting the Diaspora communities –
transnational networks of migrants – can be a precipitated measure, taking into account
20 ufrgsmodelunitednations2010
that usually the country of origin does not have institutions in place. This would mean
giving preference to migration policies over development ones.
2.2.2. Impacts on host countries
One of the most important impacts of migration refers to the effects of migrant
workers over the labor market of host countries. Irregular migrants are often seen to
take jobs from citizens in receiving countries – potentially contributing to
unemployment – and to be a drain on government services. However, there is some
evidence that these negative stereotypes of irregular migrants are overstated (SWARD;
SABATES-WHEELER, 2008). Pritchett (2006) has noted that developed states spend
US$ 17 billion per year fighting illegal immigration. He argues that if the same
countries let in enough migrants to increase their workforces by 3% this would result in
US$ 300 billion in additional remittances flowing to poor countries and US$ 51 billion
in growth for receiving countries.
Considering legal immigration, it is important to highlight that receiving
nations are clearly benefiting from an influx of students and workers who often have
skills needed to overcome bottlenecks in production or research. Even if foreign
students leave after graduating in the host country, they still provide much in the way of
research and teaching services before they depart (REGETS, 2003).
What opponents of highly skilled migration often fear is the exclusion of
natives from jobs and opportunities for formal education – a reduction in native skill
levels. However, most part of migrants takes the jobs that employ low-skilled workers
(REGETS, 2003).
Another complaint made by host countries is that migration drives down their
wages. The point is that the little empirical evidence to support these arguments are
usually weak or ambiguous (United Nations Population Fund – UNFPA, 2006).
Some studies suggest that temporary migration could provide a win-win-win
outcome in which host countries benefit from access to needed labor, and migrants and
home countries benefit from greater human capital and labor productivity upon
migrants’ return (MORRISON; SCHIFF; SJOBLOM, 2007).
Furthermore, immigration in those countries going through the second
demographic transition – characterized by low fertility, and sometimes negative growth,
21 ufrgsmodelunitednations2010
and high proportion of non-working elderly people – can help to offset population
decline and the decrease in the working-age population. The counterargument here is
the one concerning with preservation of a cultural identity (UNFPA, 2006).
As underscored, migration has positive and negative impacts both over host
and origin countries. The core issue is how to minimize the negative effects and
maximize the positive ones.
2.3 Current Situation and Trends on Migration
The economic turnover back in 2008 has severely affected remittance flows
and migrations path worldwide due to economic recession in many host countries
(reducing jobs for migrants, for instance). Before the financial crisis, remittances were
growing stronger. In 2007 the remittance flow to developing countries reached the
amount of $285 billion (RATHA; MOHAPATRA; SILWAL, 2009a) and in 2008 it
went up 17% to the amount of $336 billion (RATHA; MOHAPATRA; SILWAL,
2010). However, it has slowed down since the last quarter of 2008. According to the
World Bank Migration and Development Brief, in 2009, officially recorded remittance
flow to developing nations went down 6%, reaching the amount of $316 billion. Taking
in account some recovery movement in global economy, it is expected that remittance
flows are going up by 6.2% in 2010 and 7.1% in 2011 (RATHA; MOHAPATRA;
SILWAL, 2010).
On a regional perspective, the financial crisis has seriously affected the United
States’ remittance flows to Latin America. The continuing weakness in the job market
in the United States and the slowdown on the construction sector, major employer of
immigrants, reflected in 2009 as an estimated 12% fall on remittance flows to Latin
America and the Caribbean (RATHA; MOHAPATRA; SILWAL, 2010). On the same
track, remittance flows from different origin countries to other regions have also fallen
in 2009, such as Eastern Europe and Central Asia (21%) and the Middle East and North
Africa (8%). “In contrast, flows to South Asia and East Asia have been strong”
(RATHA; MOHAPATRA; SILWAL, 2009a). This is explained by two main reasons:
(a) most of Asian migrants are working in GCC countries, which have not reduced
hiring migrants; and (b) many migrants are switching motivations for remittances, from
22 ufrgsmodelunitednations2010
consumption to investments, due to lower assets price, rising interest rate differentials
and a depreciation of the local currency.
Bearing in mind these regional trends it is possible to establish three paths.
First, remittances are more resilient where migration destinations are more diverse. For
example, the migration destinations to India and the Philippines are diversified, a fact
which explains why flows to these countries fell modestly in 2009 (RATHA;
MOHAPATRA; SILWAL, 2010). Second, “the lower the barrier to labor mobility, the
stronger the link between remittance and economic cycle in that corridor” (RATHA;
MOHAPATRA; SILWAL, 2010, p. 7). For instance, migrants from neighboring
countries are allowed to move in and out through the Russia’s porous border in reflect
to the economic situation. In such case, it is possible to observe that remittances are
correlated to business cycle in the source country. Third, movements on the exchange
rate produce valuation effects. “Remittance flows to the Kyrgyz Republic, Armenia, and
Tajikistan declined (…) during 2009, partly because of the depreciation of the Russian
ruble” (RATHA; MOHAPATRA; SILWAL, 2010, p. 9).
2.3.1. Policy Response
Taking into account the effects of the recent financial crisis (weakening job
market, unemployment, etc), it has risen in many receiving countries social commotion
urging for restriction on immigration and tighter border control, as well as anti-
immigration sentiments. For instance, measures to reduce the inflows of new migrants
are being considered by several European countries (RATHA; MOHAPATRA;
SILWAL, 2010).
One of the main concerns raised on rich nations by the crisis is to protect jobs
of native workers. However, there is little evidence that immigration control would
reduce immigration or protect native workers (RATHA; MOHAPATRA; SILWAL,
2009a). Actually, there are some risks on increasing immigration control in order to
protect native workers, since it “might imply a trade-off between protecting native
workers from job competition and protecting employers” (RATHA; MOHAPATRA;
SILWAL, 2009b, 12). In short term, business need flexibility on hiring and firing
decisions to cut costs and survive the crisis, which in medium term may lead to a more
sustainable recovery. Therefore, a market-based approach may be the road to take in
23 ufrgsmodelunitednations2010
order to help employers and firms to preserve the productive capacity in receiving
countries, and also maintain the lifeline of remittances to sending countries (RATHA;
MOHAPATRA; SILWAL, 2009a).
In the same pace in which migration control is getting tighter, the duration of
migration is increasing, the ones staying are likely to continue to send remittances
home. According to data collected by the Mexican Migration Project, the period during
which Mexican migrants stay in the United States has increased from 8 months in the
beginning of 1990s to 15 months recently. It is believed that such reluctance is not only
caused by the difficulties in coming back but due to the significantly higher incomes
that migrants are earning in developed nations despite the crisis (RATHA;
MOHAPATRA; SILWAL, 2010).
On the issue, some countries are giving financial incentives to promote return
migration. So far, such programs do not seem to work as expected. In Spain, for
instance, in November 2008 the government introduced financial incentives to
immigrants voluntary return to their home countries, but 6 months after the beginning of
the program the government had not received the amount of applications it had expected
(MINISTERIO DE TRABAJO E INMIGRACION, 2009). Other countries that have
adopted similar programs are Japan and the Czech Republic in 2009, although both have
not achieved the expected results.
Through the opposite perspective, migrant-sending countries are working on
compensating any possible reduction on new migration flow by trying to establish guest
worker programs with destination countries (RATHA; MOHAPATRA; SILWAL,
2009b). For instance, India is working on mobility partnerships with European nations
(NVO, 2009). Although numbers have not shown such movement, sending countries are
concerned about a large group of migrants returning home. If that becomes true, it is
suggested that countries take advantage of it, once migrants come back home with
skills, entrepreneurial energy and capital. Forced by the Persian Gulf War in 1991,
many migrants returned to Jordan during the war, and in this period “Jordan's economy
performed better than many observers had expected between 1991 and 1993 because of
the return of relatively skilled workers from the Gulf” (RATHA; MOHAPATRA;
SILWAL, 2009b, p.11).
On a different perspective, it is relevant to stress that remittances are the first to
come in times of crisis and natural disasters, money sent by relatives tends to come
24 ufrgsmodelunitednations2010
much faster to the ones in need than international support. Bearing this in mind, three
days after the devastating earthquake in Haiti, the United States granted temporary
protected status (TPS) for 18 months to any Haitian already in the US. The TPS status
benefits over 200,000 Haitians “currently residing in the US without proper documents
to live and work in the US legally, without fear of deportation” (RATHA;
MOHAPATRA; SILWAL, 2010, p.5).
2.4. Topics on Migration and Remittance
2.4.1. Brain Drain
Brain drain is defined as “the departure of skilled migrants from their place of
origin to another country” (CHAPPELL; GLENNIE, 2010, p. 1). A classical example of
brain drain is an overworked doctor from a impoverish country that migrates to a
developed nation looking for better payment and conditions (CHAPPELL; GLENNIE,
2010). There are several reasons that stimulate skilled migrants to move to a more
developed country. Wage is considered the main cause of brain drain, once it differs
widely between countries. It is a key motivation for students and those working in
professions as health care, in which skills are easily transferable. Employment
opportunity is other key reason for migration and it is related to the point in which
migrants are in their careers, being of top importance for students. Access to
professional development – better training and more varied experiences - is an
important reason to move for migrants who are already employed.
The decision to leave the home country is also shaped by social and
professional networks. Networks influence migrants in different levels, for some it is
what makes the possibility of migrating come true, whilst others might see it as the
reason to move. It is also important to stress that socioeconomic and political climate at
home may influence someone’s intentions to migrate. Skilled workers might be forced
to leave their home country also as asylum seekers or refugees (CHAPPELL;
GLENNIE, 2010).
It is advocated that the brain drain phenomenon threatens development causing
“serious negative impact on the delivery of critical services such as health, education
and administration” on sending countries (OECD, 2006). In a compared perspective,
25 ufrgsmodelunitednations2010
taking into account the share of a country’s nationals with a university degree who live
in OECD countries, it is possible to highlight that low-income countries suffer
disproportionately from brain drain (OECD, 2010). For instance, more than half of all
university graduates in sub-Saharan Africa and Central America migrate to OECD
nations (OECD, 2010).
Fig. 1. Share of a country's nationals with a university degree living in an (other) OECD country.
Less than 2 % Less than 5 % Less than 10 %
Less than 20 % Over 20 % Not included
Source: OECD, 2010.
For a long time it was believed that brain drain was permanent, although in the
last decade researchers and policymakers have started to observe that many skilled
migrants return to their countries of origin, or move back and forth between different
destinations. This phenomenon is described as “brain circulation” (CHAPPELL;
GLENNIE, 2010). According to Chappell and Glennie (2010), there are three core
reasons that motivate high skilled migrants to return: “improvements of the situation at
home, the feeling of belonging to one’s culture and society, and the achievement of a
specific goal” (CHAPPELL; GLENNIE, 2010, p. 5). Therefore, developing countries
could benefit from knowledge and skills migrants bring home, which is demonstrated
by startup companies of returned Indian migrants, for instance (OECD, 2010).
2.4.2. Migration of Women
26 ufrgsmodelunitednations2010
Gender is a central piece of causes and consequences of international
migration. The United Nations Population Division estimates that the participation of
women or girls among international migrants is around 49%. The most common reason
of women migration is officially as dependent family members of other migrants or to
marry someone in another country. However it is considerably increasing the number of
women that are migrating on their own, in order to become the principal wage earners
for their families (UN, 2004). Although women movement is usually voluntary,
“women and girls are also forced migrants leaving their countries in order to flee
conflict, persecution, environmental degradation, natural disasters or other situations
that affect their security, livelihood or habitat” (UN, 2004, p. 27).
According to the United Nations (2004), the social roles of women, autonomy
and capacity to decide, access to funding, existing gender stratification in countries of
origin and destination are key factors on women’s migration. For instance, gender
inequality can play a major role in women’s decision to migrate, when their economic,
political and social expectations cannot be fulfilled in their country of origin (UN,
2004).
The Migration Police Institute – MPI (2003) stresses that women also migrate
to respond the demand for labor in receiving countries that are gender-specific and
which reflects existing values, norms, stereotypes and hierarchies based on gender, “the
demand for domestic workers, nurses, and entertainers focused on the recruitment of
migrant women” (UN, 2004, p. 28), for instance. Women are commonly underpaid
compared to migrant men - who are concentrated in higher-paying jobs - due to labor
market discrimination based on gender and the segregation of women in conventionally
female positions. Besides, women hired to work in domestic services or those who are
working illegally abroad are in severe risk of abuse, and depending on the destination
countries they may have no protection under laws to report mistreatment (UN, 2004).
From a sociological perspective, migrating has positive outcomes for women in
general. According to the United Nations (2004), women migrant workers tend to
become more independent and gain autonomy, changing gender relations within their
families. Moreover, it is stressed that when migrant women return to their countries of
origin they often disseminate the importance of rights and opportunities for women.
Also, when male relatives (husbands or parents) migrate, women that remain in the
country of origin usually need to take to hand financial and other responsibilities that
27 ufrgsmodelunitednations2010
were in their relatives before, and this situation “provides women the opportunity of
gaining autonomy and experience in decision-making” (UN, 2004, p. 28).
3. PREVIOUS INTERNATIONAL ACTION
3.1. Group of Eight - G8
The Group of Eight was created as a forum, in France, 1975, by governments
of six countries: France, Germany, Italy, Japan, the United Kingdom and the United
States. In 1976, Canada joined the group, and twenty years later Russia added the G7,
thus creating the G8 (BBC, 2010).
Through a series of summits, the G8 guarantees that leaders from these
countries discuss major and complex international issues. In a more specific context,
the G8 is deeply aware of the importance and the impact of remittance flows both in
sending and receiving countries, especially in those economies which are more fragile
and susceptible to international crises. Thus, in recent summits and documents, it has
been emphasized the need to collect reliable data and evidence, to cut off several costs
in formal channels – and therefore make emigrants send their money in a safer and
better way, avoiding informal means – and to make people aware of how this amount of
money could be invested, for instance, in financial domestic markets and in
microeconomic levels (G8 Information Centre, 2010).
In 2004, at the Sea Island Summit, the G8 met in order to discuss the topic
“applying the power of entrepreneurship to the eradication of poverty”. In such
direction, it was debated ways to facilitate remittance flows in order to help families and
small business. The G8 understands that these flows play a key role in private-sector
development efforts, enabling families to receive needed capital for education, housing
and small business start-ups and expansion. Therefore
the Group decided to work with the World Bank, IMF, and other bodies to improve data on remittance flows and to develop standards for data collection in both sending and receiving countries and also decided to lead an international effort to help reduce the cost of sending remittances (G8 Sea Island Summit, 2004).
The G8 Action Plan set the following guidelines to achieve this goal:
[a] Make it easier for people in sending and receiving countries to engage in financial transactions through formal financial system, [b] reduce the cost of remittance services through the promotion of competition, the use of
28 ufrgsmodelunitednations2010
innovative payment instruments, and by enhancing access to formal financial systems in sending and receiving countries, [c] encourage cooperation between remittance service providers and local financial institutions, including microfinance entities and credit unions, [d] support dialogue with governments, civil society, and the private sector to address specific infrastructure and regulatory impediments - governments should ensure non-discriminatory access to payment systems for the private sector (…), [e] seek to provide opportunities for recipients of remittance inflows to utilize that income efficiently in domestic financial markets, including for building and improving their homes (G8 Action Plan, 2004).
In Berlin, 2007, the G8 Summit embraced not only the eight traditional
countries, but also the European Commission, representatives from other countries,
international organizations, the private sector and the civil society. Two goals were
analyzed in this meeting: first, assessing how effective the measures taken to facilitate
remittance flows at the 2004 Sea Island Summit had been, and stimulate them. Second,
the meeting intended to improve formal ways through which migrants could both send
and receive money from abroad, by initiating a dialog and promoting other potential
measures (Germany Federal Ministry of Finance, 2007).
In this summit it was stressed that
[a] that National statistical offices and central banks are encouraged to continue their efforts to improve the quality of data used to compile estimates of remittance flows within the Balance of Payments framework, [b] that the Luxembourg Group continues to play an active role in helping countries improve their estimates of remittance flows and [c] that the establishment of a Global Remittance Working Group, led by an International Organization, should be considered by the G8 (Germany Federal Ministry of Finance, 2007).
The participants also welcomed the preparation of General Principles for
International Remittance Services by the international taskforce led by the Bank for
International Settlements and the World Bank. The reason why this preparation has
been emphasized is that policymakers should use these principles as an instrument to
improve the regulatory framework of the remittance industry, foster competition,
enhance transparency and strengthen consumer protection in their remittance markets.
Other important concerns raised and stressed during the summit, strongly related to
heightening the awareness of the remittances phenomenon, are: to encourage further
research on the development impact, to support the implementation of the General
Principles for International Remittances Services, and to initiate pilot programs with a
demonstration effect (BIS, 2007).
One of the main contributions to the general process of migration was the
creation, at the G8 Summit in Hokkaido Toyako, Japan, in 2008, of the Global
29 ufrgsmodelunitednations2010
Remittances Working Group, understood as an important step in order to build up an
international organism to access more accurately the data on this matter.
We acknowledge the importance of facilitating remittance flows given their development impacts. The G8 conference on remittances in Berlin in November 2007 reviewed the actions agreed at the Sea Island Summit in 2004. In this context, we will follow-up the seven recommendations adopted at the Berlin conference on improving data, development impact, remittance services, access to finance, and innovative channels and on the creation of a Global Remittances Working Group. We appreciate the work done by international financial institutions in this regard and invite the World Bank to facilitate the work of the group and provide for coordination (IMF, 2008).
In 2009, the G8 gathered in L’Aquila, Italy, in order to discuss, among other
matters, how to ensure sustainable growth and to tackle the interlinked challenges of the
economic crisis, poverty and climate change (G8 L’Aquila Summit, 2009). Concerning
poverty, it was discussed the effects of the crisis on the migration process and
remittance flows. It was established a renewed commitment to development through
assistance to developing countries and some measures formulated in earlier summits
became more concrete. It was also stressed the need to reduce the global average cost of
transferring remittances, which is still very high and one of the main reasons why
informal channels have been used by a lot of migrants (Poverty Reduction Group,
2009).
3.2. International Monetary Fund (IMF)
The International Monetary Fund provides essential database and analysis on
the matter. Even though IMF reports are usually toward a specific country and situation,
on its World Economic Outlook IMF pointed out that “remittances can help improve a
country’s development prospects, maintain macroeconomic stability, mitigate the
impact of adverse shocks, and reduce poverty” (IMF, 2005, p. 69). The report also
stressed that remittances permit families to keep or increase “expenditure on basic
consumption, housing, education, and small-business formation” and also “promote
financial development in cash-based developing economies” (IMF, 2005, p. 72).
Therefore, the Fund sees remittance as “a welcome source of foreign financing
and should be promoted”, once they are “larger and less volatile than Official
Development Assistance, they are unrequited transfers which do not create debt service
in the future” (UNB, 2007, p.1). Yet the IMF believes that countries cannot rely
30 ufrgsmodelunitednations2010
exclusively on remittance to solve financial questions, warning that “remittances are no
universal remedy and cannot substitute for good policies at home” (UNB, 2007, p.1).
The IMF also suggests that countries should promote
remittances through official channels by abstaining from dual exchange rate practices and current account restrictions, by reducing transaction costs through increased competition in the banking sector, and by fostering financial sector development more generally (FE, 2007, p.2).
3.3. The World Bank (WB)
Regarding the topic of migration and remittances, actions by the World Bank
have been pointed to the goal of broadening the international debate concerning the
issue. WB not only has been responsible for the research and aggregation of statistical
data (posed in the annually released “World Bank’s Migration Factbook”), but also has
supported and organized the elaboration of academic studies that analyze the issue in
international and regional scopes (WB, 2008b). Such studies include the “Migration and
Development Briefs”, an annual research that provides interpretation of the data
accumulated during the previous year, and that points out trends that marked the
behavior of the statistics of recent years and can be passed on to the years yet to come.
Also, the report signalizes the main regional issues regarding the topic and analyses
both the importance of economical tendencies and political actions on the phenomena.
World Bank releases also point out the importance of the migration and
remittances phenomena on social and economical development of sending and receiving
countries. It is concluded that resources originated from remittances can boost the
economical opportunities of developing countries’ families and also provide economical
advantages to developing countries such as labor market competitiveness and higher
qualification (SHAW, 2007; WB, 2008a).
The World Bank has also promoted meetings to further improve data
aggregation on remittances, such as The International Technical Meeting on Measuring
Remittances. The latest, set in Washington, in 2009, featured the cooperation of the IMF
and involved the presence of economic technicians from all over the world. Participants
discussed the need of solving issues regarding the measuring of remittances in the
nations’ balance of payment statistics, reinforcing that government agencies should
develop better information through the establishment of data. The meeting also
established the creation of a new technical working group, aiming at the coordination of
31 ufrgsmodelunitednations2010
global programs of remittance measuring and making such data available. Furthermore,
some other relevant aspects were reviewed, such as recent international and regional
initiatives aimed at improving remittances data, the implications of the financial crisis
on data quality, and the use of high-frequency remittances data to measure the impact of
the crisis (WB, 2009).
3.4. World Trade Organization (WTO)
The most important measure under the scope of WTO concerning international
migration has been implemented, during Uruguay Round in 1995: the General
Agreement on Trade in Services (GATS) Mode 4 – where Mode 4 refers to one out of
four modes of supply defined by the GATS8. This mode is the one which has more
direct implications over migration and remittances.
It is interesting to note that this mode doesn’t cover people who seek access to
a labor market in general or those looking for citizenship, asylum or permanent
residence (GENT; SKELDON, 2005; CHARNOVITZ, 2002). It can be said that GATS
looks at a natural person only as a provider of services, rather than as an individual. The
movement of natural persons is discussed in the WTO mainly as a service modality,
instead of considering the broader context of allowing workers to gain work
opportunities and experience (CHARNOVITZ, 2002).
In this sense, mode 4 is still very restrictive. Service suppliers under this
movement gain entry to country for specific purposes are normally confined to one
sector9 and temporary – neither migrating on a permanent basis nor seeking entry to the
labor market (IOM, 2010).
The impacts of the supply of services agreements, resulting of mode 4, for
developing countries can be summarized in the possibility of exploiting the relative 8 According to the GATS, modes of supply in which a service can be traded are: (a) mode 1 refers to services supplied from one country to another, officially known as cross-border supply (e.g. international phone calls); (b) mode 2 involves consumers from one country making use of a service in another country, also called consumption abroad (e.g. tourism, a patient going under surgery abroad); (c) mode 3 entails companies from one country setting up subsidiaries or branches to provide services in another country, identified as commercial presence (e.g. a bank from one country setting up operations in another country); and (d) mode 4 encompasses individuals traveling from their own country to supply services in another, officially known as movement of natural persons (e.g. construction workers, artists) (GENT; SKELDON, 2005). 9 There is a ‘sectoral classification’ list provided by WTO, but it is opened to interpretation. The list is available at http://www.wto.org/english/tratop_e/serv_e/serv_e.htm. Last accessed: August 25,2010.
32 ufrgsmodelunitednations2010
abundance of medium and less skilled workers. Also the temporary feature of mode 4
movements intends to help avoiding the ‘brain drain’ (GENT; SKELDON, 2005).
However, the outcomes of the services supply’s agreements are considered to
be truly far from what would be desirable. Mode 4 trade accounts for a small portion of
total trade in services – about 1% only (GENT; SKELDON, 2005). Considering the
overall migration, the labor migrants, and even temporary labor migrants, those under
mode 4 movements represent a little fraction not identified precisely by estimates
(WTO, 2004).
WTO law covers only a narrow band of the whole spectrum of issues regarding
the movement of people. However, some progress can be observed. The Doha Round
initiated the discussions over the need of a greater recognition of foreign licenses. The
GATS already calls for cooperation between WTO Members and relevant international
and nongovernmental organizations with the purpose of leading to the adoption of
common international standards for recognition and for the practice of service trades
and professions. As well, it has been proposed the creation of a GATS visa to facilitate
the movements of workers (CHARNOVITZ, 2002).
3.5. United Nations (UN)
The topic of international migration has been one of great interest for the UN,
especially regarding the relation between migration, remittances and development. Most
of the work in this area is carried through the Population Division of the Department of
Social and Economic Affairs (DESA) of the UN, which works on collecting data and
organizing meetings on the subject.
Recognizing the need to “review and coordinate the growing information on
international migration among interested organizations” (UN, 2002) the Population
Division of the DESA has been organizing since 2002 annual Coordination Meetings on
International Migration. At each meeting current issues regarding international
migration are discussed by representatives of different agencies of the UN, the UN
Secretariat, international organizations (such as the International Organization for
Migration and the Organization for Cooperation and Development), and by government
representatives.
33 ufrgsmodelunitednations2010
The latest Coordination Meeting was held 2009. Taking place in the aftermath
of the latest financial crisis, the meeting had as its objectives
(a) to assess the impact of economic and financial crisis on international migration, (b) to review initiatives to strengthen the evidence base on international migration and development, and (c) to exchange information among United Nations entities and other relevant international organizations on current and planned activities in the area of international migration and development (UN, 2009).
Discussions on the topic of international migration also took place in the
framework of the General Assembly of the United Nations. In 2006 this organ decided
to dedicate a High Level Dialogue to the discussion of the relation between migration,
development and the effects of state policies on migration. The Dialogue consisted of
four interactive Round Tables, each addressing a different topic: Table 1 discussed the
effects of international migration on social and economic development; Table 2 focused
on the human rights of migrants and on the combat of smuggling of migrants and traffic
of persons; Table 3 discussed the multidimensional aspect of international migration,
including remittances; and Table 4 treated the building of partnerships at the multilateral
and bilateral levels to the benefit of both states and migrants (UN, 2006).
Through the United Nations Development Programme, the UN has also
treated the role of women on international migration. Through this Programme, it was
launched a document emphasizing the need to discuss women’s role in the use of
remittances in order to produce and stimulate a responsible local development:
gender based analysis is essential to not only have an improved understanding of the remittances in flow through the informal sector but also for defining sustainable and participatory interventions for creating entrepreneurship opportunities at the bottom of the pyramid that can assist in transition of the informal private sector towards greater formality (UNDP, 2007)
The main goals of this project are:
[a] To increase awareness and improve access by women headed remittance- recipient households to productive resources while augmenting their assets and to strengthening their capacities; [b] To provide relevant information and support local and national governments to identify and formulate policies to optimize the utilization of remittances for sustainable livelihoods and building social capital; [c] To enhance capacity of key stakeholders to integrate gender into policies, programmes, projects, and other initiatives linking remittances with sustainable livelihoods and building social capital (UNDP, 2007).
The UN has also been dedicated to the gathering of information and data
regarding international migration, such as the number (“stock”) of international
34 ufrgsmodelunitednations2010
migrants by country of birth and citizenship, sex and age as enumerated by population
censuses, etc10.
4. BLOC POSITIONS
4.1. Developed Nations
Among receiving countries, the United States of America has been one of the
top destinations for immigrants (WB, 2008b). According to the US Citizenship and
Immigration Services (USCIS), immigration represents not only a stack of opportunities
(regarding mutual economical gains between the State and immigrant families) but
challenges as well. The USCIS believes that globalization has made the United States an
attractive destination due to the country’s economical strength and its civic values, but it
also has comprised a great number of issues regarding national security, since it can
contribute to mass migration, both legal and illegal. In order to provide better service to
its immigrants and mitigate security problems, the United States has been focused on
raising its security capabilities, both within the State’s organisms and among
international cooperation, by promoting partnerships with sending countries. The
USCIS strategic plan comprising the years of 2008 to 2012 reinforces the State’s
interest on making better use of technology to increase gains in security and services,
and also on creating programs that can provide a background on the immigrants’
activities, to facilitate service provision, better integration of immigrants and to reduce
social risks (USCIS, 2007).
The European Union (EU) has been aiming at the development of a
common immigration policy, considering the demographic and economical situation of
the bloc. As its main objectives, the EU seeks to provide legal immigrants from within
the bloc with services that promote better integration, in order to maintain the principle
of freedom of movement. However, it has been stated that the EU intent to allocate
migrants in the development of specific economical sectors and regions of the bloc,
following the economical planning of the EU’s agenda, thus making more restrictions to
regions that have no priority at the time (EUROPEAN COMISSION, 2010).
10 This data is available at the United Nations Global Migration Database, at http://esa.un.org/unmigration/. Last accessed: August 18, 2010.
35 ufrgsmodelunitednations2010
The EU has tried to promote development programs for sending countries
inside the bloc in order to compensate the flow of labor-force from outside these
countries. The bloc seeks to achieve such goal by making use of economical and social
policies that can further improve the countries’ situations and make them an attractive
destination for immigrants. Regarding third-country nationals residing in the EU, the
bloc has been aiming at not only providing humanitarian assistance to these individuals,
but also providing their home countries with financial assistance and readmission
agreements for immigrants to return to their countries of origin (EUROPEAN
COMISSION, 2010). Another important topic involves the combat of illegal
immigrants. Poland and Czech Republic, along other Eastern Europe Countries that
became members of EU in 2004, have been the major target of European Union
policies against illegal immigration, since the border control in these states is inefficient,
making it easier for illegals to reach EU countries (IGLICKA, 2005).
Japan has historically maintained its ethnic identity in the country, thus
putting barriers on immigration of non-Japanese descendents. With globalization’s
effects on the Japanese economics, alongside with statistics proving the country’s
negative population growth and the lack of labor force inside Japan, the State has been
reviewing its immigration policy, by making the acceptation of multi-ethnical
population possible. Specialized professionals such as nurses, medical doctors,
researchers and technicians have had a relaxation of labor influx control mechanisms.
Another principle underlined in Japan’s immigration policy involves the use of pressure
on foreign countries to make better use of control over nationals that have been deported
from Japan (KASHIWAZAKI and AKAHA, 2006). Japan has also responded to
international pressures over its lack of policies regarding human trafficking, by applying
aggressive measures against illegal work and providing better assistance to victims
(IMMIGRATION BUREAU OF JAPAN, 2010).
Australia and New Zealand have also been a great destination of
immigrants, especially after the abolishment of the ‘White Australia Policy11’, in 1966.
Both countries recognize the importance of the immigrant population for their
demographical growth and their economies. However, the tendency of facilitating labor
11 The White Australia Policy is a set of policies initiated in 1901 that restricted immigration of non-white (non-european) to the country. These policies were abolished in 1966, but only in 1973 the Australian government took effective measures to remove race as a factor in immigration policies. More information at http://www.immi.gov.au/media/fact-sheets/08abolition.htm Last accessed: August 18, 2010.
36 ufrgsmodelunitednations2010
force influx was weakened by the recent economical crises, which made Australia
intend to limit the admission of skilled migrants (IOM, 2009). Australia and New
Zealand believe they can to set an example for the international community on how to
manage humanitarian assistance to refugees, immigration services provision, working
for social integration with immigrants and combating racial prejudice (DIAC, 2008;
NEW ZEALAND, 2010).
Another country that has relied on immigrant labor force in order to
combat labor shortages and reach better economic results is the Russian Federation.
Russia, that until recently did not have a proper migration policy, now seeks to promote
public policies aiming at the loosening of immigration restrictions, especially of highly-
qualified professionals. One of the strategies adopted by the government was a
preferential treatment agreements with other countries for the sending of specialized
personnel (BANJANOVIC, 2007). Although Russia recognizes the demographic
importance of immigrants and one of the causes of positive population growth, the
economical crises led to imposing of reduced numeric quotas of immigrants (IOM,
2009).
4.2. Developing Countries
Sending countries, which comprise a series of developing countries, are
also concerned with the topic of migration. In general, this group of countries have to
deal with immigration towards its on boarders as well, a fact that approaches them to
receiving countries’ concerns with security and the provision of qualified service to
legal immigrants, as it is recognized their capability of adding economical and technical
gains to the developing countries’ economies. However, sending countries also defend
in multilateral forums the need of liberalization of economic flows regarding
remittances (WB, 2008a). Since most of developing countries cannot offer their most
specialized professionals with the same opportunities offered abroad, remittances are an
important source of compensation for these States, not in the form of external aid, but as
private resources that can be helpful to raise the migrant families’ life standards. The
proposal of these countries involves diminishing barriers to remittance sending, since
“in addition to raising consumption levels, the steady stream of foreign currency
improves a country's creditworthiness for external borrowing” (WB, 2009). Sending
37 ufrgsmodelunitednations2010
countries also expect immigrants to be integrated in developing countries’ economies,
thus being able to acquire knowledge and qualification, which can be useful for the
sending countries’ development if their nationals abroad decide to return. (WB, 2009).
Latin America countries support easiness in remittance transfers. Since
a large part of Latin American immigrants make permanent shifts to countries abroad,
Latin America States rely on immigrants’ ability to create economical links between
their homeland and the country were they are transferred to. Being the recipients of a
large part of remittances worldwide, these countries are willing to work alongside
receiving countries to further promote remittance expansiveness and technical
cooperation to compensate the brain drain phenomenon (WB, 2008a). Recognizing the
matter of illegal immigration, Latin American countries also seek to solve the problem
by coordinated control with receiving countries and defending the welfare of its citizens
abroad, but also stating that a social and economical cooperation approach could lead to
an improvement of the situation (WB, 2008a).
With the recent economical boom of the People’s Republic of China,
Southeast Asian countries have also seen a great number of citizens migrate, most times
illegally, to Chinese territory. Seeking opportunities in rural areas that have been left
behind by Chinese workers, when urbanization rapidly accelerated in the 1970’s, illegal
immigrants represent a great challenge to China’s domestic policy, favoring
strengthening policies specially with Mongolia and North Korea. According to the
World Bank (2009), China also represented one of the top emigrant countries in 2005,
with over 7 million people leaving the country, although only 4.2% represented tertiary
educated citizens. The Chinese government envisions a broadening of student exchange
programs to raise professional qualification (SKELDON, 2004a), as well as seeks
cooperation with receiving countries, specially the United States, to solve problems
regarding illegal immigration (MOFAOTPRC, 2009).
Indonesia is another country facing issues on migration, since its
population surplus often leaves to other Asian countries, especially Taiwan and
Malaysia. Although a part of the immigrants leave the country through legal channels, it
has been appointed that most part of Indonesians do not register as overseas contract
workers in the Indonesian Ministry of Labor (HUGO, 2007). The government has been
seeking to diminish problems by providing information and training to their migrant
38 ufrgsmodelunitednations2010
population and also by cooperating alongside receiving countries to increase the
protection of the rights of Indonesian workers. Indonesia is not widely affected by the
brain drain phenomenon, but is largely benefited by remittances, although most of them
are transferred through illegal channels (HUGO, 2007).
Representing the top migrant-sending country in Asia, the Philippines
has been set by the World Bank as a positive example of policy making towards migrant
protection due to its Philippine Overseas Employment Administration, a governmental
organization that helps Philippine workers with working contract’s administration and
licensing with foreign firms and agencies. The country also developed an efficient
mechanism of remittance monitoring inside the Philippine Central Bank, and the State
has applied programs in order to incentive remittance transfers through formal channels
of banking corporations (WB, 2005). This way, the resources not only reach the families
directly, but they also are allocated by Philippine nationals abroad in funds that aim at
treating humanitarian causes and small-infrastructure programs inside country. The
Philippines has shown an historical of high dependence on remittances to mitigate
social-economic issues, such as poverty and unemployment, which have been the major
push factors of the country’s labor force (WB, 2005). In spite of that, the government
aims at continuing “exporting” Philippine labor force, indicating that further
development programs inside the nation will still depend on resources coming from
abroad (ASIS, 2006).
India also has been committed to support its nationals abroad with
financial programs that can boost the country’s economics as well. The government’s
incentives to apply a migration policy involves the importance of overseas Indians as
agents of trade, technology and investment, specially after some of these citizens started
to emerge as high-level executives of multinational corporations. Student migration and
brain drain are recurrent phenomena observed in the country. Taking this into
consideration, India has worked alongside Indians emmigrants to incentive remittance
and investment programs (such as the Overseas Indian Facilitation Centre, created in
2007) that can further improve the country’s social-economic condition (NAUJOKS,
2009).
The Middle East and North Africa (Maghreb) countries are desolated by
migratory issues. These regions are estimated as one of the top corridors of illegal
immigration in the world, especially regarding human trafficking of women and
39 ufrgsmodelunitednations2010
children. Regardless of international support, Arab countries in general have a reduced
power over migratory control, and the situation is far away from a solution. The Middle
East has also been characterized lately as another region that experiences the brain drain
phenomenon, having its students, doctors and other qualified professionals seeking
better opportunities in the United States and the European Union (BALDWIN-
EDWARS, 2005). Oil exporters, such as Saudi Arabia, seek to create social-economic
development strategies that can both draw high-qualified labor force and maintain its
best minds inside the country. Saudi Arabia also qualified as the world’s second
remittance source in 2005 (WB, 2008b), having a large deal of temporary migrants from
other Middle East countries working in the oil industry. This fact encouraged the
government to promote protection for foreign workers as the country seeks to make its
own labor force participate more in the economical process (PAKKIASAMY, 2004).
Sub-Saharan Africa migration represents the largest corridors without
border control and data arrangement in the world. Most of the migratory movement
involves transit between neighbor countries, where Africans seek improvement of
earnings, either temporarily or by settling permanently (SHAW, 2007). Even though
African countries added few restrictions on migratory movements, the States have
shown little power to impose such limits to immigration and emigration, making
undocumented migration a usual phenomenon in the region. With that, there has been
little legislation on immigrant protection in the countries as well. Uncontrolled
migration has also proven to encourage massive refugee installment in neighbor
countries (which can regionalize conflicts even further) and spread infectious diseases
through the continent, such as AIDS. On a positive aspect remittance has grown
throughout Sub-Saharan Africa, but there has been little governmental action to reduce
barriers to resource transferring and, most of the time, individuals end up recurring to
informal channels. Furthermore, States have tried subsidy programs, by rewarding
nationals that return to the countries, especially skilled emigrants that had its
productivity abroad improved, but the resources for this policy have been limited, and
the results have been mixed (SHAW, 2007).
5. QUESTIONS TO PONDER
1. How migration and remittances relate to the World Bank's scope?
40 ufrgsmodelunitednations2010
2. Which measures could be taken with the intent of magnifying the benefits of
migration and remittances? On the other hand, how can the Board help to reduce the
negative impacts caused by migration and remittances? How can developing and
developed countries work together to solve controversial issues like the brain drain, the
impacts of migration over labor markets, etc.?
3. What should developing countries do, as sending countries, to support their
migrants and to benefit from emigration? Should actions be taken in sending countries
to dissuade emigration? If so, what kinds of policies should be adopted by sending
countries in this regard?
4. Which policies over migration could developed countries, as host countries,
adopt? Should these policies be more restrictive or more liberalizing ones? 6. What
actions should receiving countries take in order to guarantee the assimilation of
immigrants into the receiving society?
5. Receiving countries in general have stated that, regarding illegal
immigration, it is vital for the countries' national securities to invest in technology. Is
this the right approach to deal with illegal immigration? Should the World Bank support
investments directed to security programs? Which actions should be taken to minimize
immigration through illegal channels?
6. Which actions should be taken by the whole international community so as
to develop and improve better channels of information and data on the migration and
remittances issue?
7. How countries, together with international institutions, such as the World
Bank and the FMI, deal with emergencies in the international framework directly
involving migration's problems, e.g. 2010 Haiti earthquake?
41 ufrgsmodelunitednations2010
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