1. Migration, remittances, and development indicators: The economic pillar Ben Slay Team leader, regional poverty reduction practice UNDP—Europe and Central Asia Almaty, 1 November 2013

2. Three inter-woven themes Economics of migration and remittances Policy areas or particular relevance: – Labour markets – Macroeconomics – External sector (balance of payments) – Development Measurement/indicator issues – Suggested indicator framework

3. The labour market and (external) migration Pluses: – Employment – Human capital acquisition Minuses: – Brain drain – Informality: Host countries—many migrants work in informal sector Countries of origin—migrants don’t contribute to state pension funds – Social impacts: Host countries—risk of exploitation, social tensions Countries of origin—split-up families, hardships for children

4. Macroeconomic, balance-of-payments dimensions—Pluses Global economy: Migration from lower to higher productivity countries increases global GDP Host countries—migration reduces: – Wage-push inflationary pressures – Sectoral, regional labour market shortages Countries of origin—remittances support: – Domestic financial systems: Foreign exchange inflows (stable exchange rates) Working capital for small businesses – Domestic demand: Consumption Investment (housing construction)

5. Macroeconomic, balance-of-payments dimensions—Minuses Countries of origin: – Dutch disease? Remittance inflows may boost real exchange rate and reduce the competitiveness of labour-intensive exports Value added captured by host country instead – Excessive consumption? – Sustainability? External shocks (2008-2009) Migration cycle Host countries: – Lower wages?

6. Development—Poverty reduction (Example: Kyrgyz Republic) IMF, World Bank data; UNDP calculations.Source: National Statistical Committee, Kyrgyz Republic.

7. Development finance—Do remittances matter more than ODA? Are remittances self-targeting anti-poverty transfers? Should Russia get credit for supplying such large remittance outflows? World Bank, IMF, OECD data; UNDP calculations. * As per UNSC resolution 1244 (1999).

8. Measurement issues: Labour markets Key institutions: – Statistical offices – Ministries of labour/social protection – Migration/border services Survey data: – Labour force surveys – Household budget surveys – Company data (on recruitments, redundancies) Registration data (from migration/border services) Migration data can be “backed out” from data on: – Remittance inflows – Average wages in key sectors

9. Possible migration indicators Possible indicators: – Migrants/population – Migrants/labour force – Migrants/employed – Migrants/unemployed These can be applied to both countries of origin and destination Is further disaggregation possible, by: – Sector of employment? – Region? – Other vulnerability criteria (e.g., gender)?

10. Possible remittance indicators Mentioned above: – Remittance inflows (outflows)/GDP – Remittance inflows (outflows)/ODA – Remittance inflows/household incomes (HBS data) Other possible indicators: – Remittance inflows/exports of goods and services – Remittance inflows/trade balance – Remittance inflows/current account balance – Remittance inflows/domestic consumption

11. Adjusting the trade balance for remittances: The case of Tajikistan In billions. Sources: National Bank of Tajikistan, IMF; UNDP calculations. * Customs data.

12. Suggested indicator framework— Remittances Suggested indicatorFeasibility 1Pre-, post-remittance poverty rates This indicator could be specified as an elasticity, or as a % (or percentage point) differential. The underlying data are available in most countries in the region. 2Remittance inflows (outflows)/ODAThese data are available now. 3Remittance inflows (outflows)/GDPThese data are available now. 4Remittance inflows (outflows)/trade balanceThese data are available now. 5Remittance inflows/household incomesThese data are publicly available now, for most countries in the region. 6Remittance inflows/household spending (or retail sales) These data are publicly available now, for most countries in the region. 7Remittance inflows/construction spendingThese data are publicly available now, for most countries in the region. 8Remittance inflows/company working capitalThis would require specialized surveys.

13. Suggested indicator framework— Migration Suggested indicatorFeasibility 9Migrants/population Although registration data can provide some useful information, specialized surveys of migrants would be required. 10Migrants/labour force 11Migrants/employment 12Migrants/unemployed 13Sectoral, regional characteristics of migrants 14Socio-economic vulnerability characteristics of migrants Note: “migrants” can be measured either as stocks or flows (i.e., changes in stock levels).

14. Thank you very much! Ben.slay@undp.org