The Trade and Development Board continued its fifty-sixth executive session with a high-level debate entitled "Maximizing the development impact of remittances and diaspora knowledge in LDCs: Policy implications."
Ms. Zeljka Kozul-Wright, Chief of UNCTAD's Least Developed Countries Policy Analysis and Research Cluster, opened the discussion by noting that "as long as a doctor in Cameroon sees a colleague who has emigrated to the United States earning 20 times as much as he does, you will have a pull factor sending highly qualified people from LDCs abroad."
Remittances sent home by such emigrants, which now total some $27 billion per year, were a major boon to LDC economies, and especially to recipient families, she said. However, "the other side of the coin is the costs of migration in terms of brain drain, as many of the most educated young adults are involved. For example, one in every five people in LDCs with tertiary education leaves his or her country, as compared to one in every 25 in the case of the developed countries."
Remittances were not a panacea, and could not replace such forms of aid as official development assistance (ODA), she told the meeting. "But they are a surprisingly reliable and substantial source of income, which increased even during the global financial crisis and following it."
Mr. William Lacy Swing, Director-General of the International Organization for Migration, told the Trade and Development Board that among the irresistible driving forces sending millions of people out of the LDCs was the primary force of population growth; he pointed out that during the twentieth century, the global population had quadrupled. He added: "People are going to follow their dreams of having a better life."
Mr. Swing said that the way to address these issues was for emigrant and immigrant countries - in fact, for all countries - to take a holistic approach to the LDC diaspora, to remittances, and to the brain drain question. "We must engage, enable and empower these migrants," he said.
Mr. Swing continued by noting that the world needed to prepare for still more increased mobility. It must research the socio-economic impacts of the financial resources of LDC migrants, he said, as well as the issue of transfer costs, and find ways to lower the costs for remittances sent home to LDCs. It must find multiple ways for members of the LDC diaspora to remain engaged with their home countries, so that they can share their knowledge.
Professor Ennio Rodríguez, former Costa Rican Minister of External Finance and Debt, said that remittances served to reduce poverty, increase expenditures within LDCs on education and health, protect families against adverse shocks, and finance housing and other capital investments.
However, he cautioned, "Remittances are not focused on the poorest countries, or on the poorest households or geographic regions within countries." In addition, migration costs appeared to discriminate against the poorest households. Improving the "environments of recipients" was a key factor in ensuring that remittances played a major role in development, he said.
In order to achieve that aim, governments needed to set up well-functioning institutions, and to have adequate public policymaking capacity in areas related to remittances and economic development, he said. At the local level, he recommended that LDC governments should strive to improve conditions in the communities where the families that receive remittances live, for example by building roads and irrigation systems. They should also strive to empower households so that they have greater access to public services.
Professor Rodríguez commented that one possible development strategy was the use of "diaspora bonds" - debt instruments issued by LDC governments to raise funds from their diaspora populations.