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examBoard: Cambridge
examType: IGCSE
lessonTitle: Impact of migration - economic consequences
Migration is one of the most visible aspects of globalisation. Every year, millions of people move across borders seeking better opportunities, safety, or new experiences. These movements have significant economic consequences for both the countries people leave (sending countries) and the countries they move to (receiving countries).
Key Definitions:
When people leave their home countries, it creates both opportunities and challenges:
Countries that receive migrants also experience mixed effects:
One of the most significant economic consequences of migration is the flow of remittances from migrants to their home countries. These financial transfers have become a major source of income for many developing nations.
According to the World Bank, remittances to low and middle-income countries reached $589 billion in 2021. This is more than three times the amount of official development assistance and, in many cases, exceeds foreign direct investment.
For countries like the Philippines, Nepal and El Salvador, remittances account for more than 10% of their GDP, providing a crucial economic lifeline.
Families receiving remittances often spend on education, healthcare and housing, improving their quality of life and future prospects.
Unlike other financial flows, remittances tend to be stable or even increase during economic downturns, providing a buffer against crises.
The Philippines has one of the most organised systems for overseas labour migration in the world. Around 10% of the Filipino population works abroad, sending back over $35 billion annually in remittances. These funds support families, fund education and have created a construction boom in many regions. However, this has led to dependency, with the government relying on these workers as "modern-day heroes" rather than developing domestic industries. Many families face social costs with parents separated from children for years, creating what some call "remittance orphans."
Brain drain occurs when highly skilled professionals like doctors, engineers and scientists leave their home countries for better opportunities abroad. This phenomenon can significantly impact inequality between societies.
When skilled professionals leave developing countries, it can create serious gaps in essential services and slow economic development. However, it's not always straightforward.
Sub-Saharan Africa faces a severe shortage of healthcare workers, with countries like Malawi having just 0.2 doctors per 10,000 people (compared to 28 in the UK). Many African-trained doctors and nurses work in wealthy countries like the UK, USA and Canada. This migration worsens healthcare inequality, especially during crises like the COVID-19 pandemic, when these professionals were desperately needed at home.
Not all skilled migration is negative. "Brain circulation" occurs when migrants return home with new skills, connections and capital. India's IT industry benefited from professionals who studied or worked in Silicon Valley before returning to start companies in Bangalore and Hyderabad. These returnees helped transform India into a global tech hub, creating jobs and transferring knowledge.
Migration can significantly affect wages and employment in both sending and receiving countries, sometimes in unexpected ways.
The impact of migration on wages and employment depends on many factors, including the skills of migrants, the structure of the economy and labour market regulations.
When migrants bring skills that complement the local workforce, they can boost productivity and create more jobs. For example, in the UK, Polish plumbers who arrived after 2004 helped address a shortage in the construction industry, enabling more building projects to proceed.
Many developed countries face ageing populations and labour shortages in specific sectors. In Germany, the "Willkommenskultur" (welcome culture) for Syrian refugees partly aimed to address demographic decline and fill jobs in healthcare, engineering and skilled trades.
After Brexit, the UK's agricultural sector faced severe labour shortages when many Eastern European seasonal workers could no longer easily work in Britain. In 2021, farmers reported leaving crops to rot in fields due to lack of pickers. The economic consequences included higher food prices, reduced exports and some farms scaling back production. This case illustrates how migration restrictions can disrupt economic sectors dependent on migrant labour. The government eventually introduced a seasonal worker scheme, but with fewer workers than the industry needed.
Migration both reflects and affects inequality between societies. People often move from poorer to richer countries seeking better opportunities, but these movements can either reduce or reinforce global inequalities.
Migration presents a paradox for global inequality. While it often helps individual migrants and their families escape poverty, the broader effects on inequality between countries are complex.
Migration can reduce inequality when remittances flow to poorer regions, when migrants return with new skills and when diaspora communities invest in their home countries.
Migration can increase inequality when it creates a "brain drain" from poorer countries, when it leads to dependency on remittances rather than development and when it concentrates talent in already wealthy nations.
Strict immigration policies in wealthy countries can maintain global inequality by preventing people from poorer countries from accessing better opportunities.
The economic consequences of migration in our globalised world are neither wholly positive nor negative. They depend on specific contexts, policies and the types of migration taking place. What's clear is that migration is an essential part of our interconnected world economy, with profound effects on inequality between societies.
As you consider these issues, remember that behind the economic statistics are real people making difficult decisions about their lives and futures. Understanding the economic consequences of migration helps us develop more informed and humane approaches to managing population movements in our globalised world.
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