Global Development: Views from the Center
January 28, 2008
The Best Provocative, Short Read on Migration And Development
Posted by Michael Clemens at 08:54 AM
Harvard professor and CGD colleague Lant Pritchett has given a stunning interview to Reason magazine that will be a revelation if you haven't yet been exposed to Pritchett's incandescent ideas on migration and development. Below are selected quotations from Pritchett in the interview.
On aid and migration:
If we succeed in making Africa richer, there is going to be more pressure in outward migration rather than less. … The idea that aid and migration are substitutes is just not consistent with the experience of the world. [And] we shouldn't create hostages. We shouldn't keep people locked in place within some arbitrary post-colonial boundaries just so we can continue with the bold experiment of trying to make nation-states develop. People should be free to move.
On trade and migration:
Relative to when I started working as a trade economist in the early 1980s, [trade] is completely liberalized. So the incremental gains from anything that could happen as a result of WTO negotiations are just infinitesimal. … There are almost no tariffs left over, say, 20 to 25 percent, and yet wages for unskilled labor differ not by percents but by an order of magnitude -- workers in some poor countries make 8 cents an hour, not 8 dollars an hour.
On opposition to immigration:
I don't want to say that people who are concerned about inequality in the U.S. aren't right to be concerned about inequality in the U.S. But I think taking that concern and using it to keep people from coming to the United States is victimizing the world's true victims in favor of people who happen to live closer to you.
On discrimination in hiring:
If we say we are going to discriminate against ethnic Indians in Mexico vs. other citizens of Mexico, there would be a hue and cry across the world. But if we say we're going to discriminate in favor of people of Mexican descent born in the United States vs. people of Mexican descent born in Mexico, this creates absolutely no moral outrage.
On the compatibility of free migration and the welfare state:
Milton Friedman is wrong. It's not incompatible with a welfare state; it's incompatible with a welfare state that doesn't differentiate between people within its territory. Singapore manages to maintain an enormously high level of benefits for its citizens with massive mobility. Kuwait has one of the highest immigrant populations in the world, and you can't ask for a more cradle-to-grave welfare state than what Kuwait gives its citizens. So it's obviously possible to maintain whatever level of welfare state you want and have whatever level of labor mobility you want, as long as you're willing to separate the issues.
I find these thoughts compelling; they demand a much better response than researchers and policymakers have given them so far. CGD's initiative on migration and development, which I lead, is exploring some of these and related issues. If you want to know more about where Pritchett's radically moral ideas lead him in terms of practical policy proposals, read the whole interview above, then consult his penetrating book, Let Their People Come.
January 11, 2008
Media Reports on African 'Brain Drain' Misunderstand My Research
Posted by Michael Clemens at 04:54 PM
This week I watched with a queasy stomach as my own research was widely reported in support of a belief that is the exact opposite of my findings. Citing a new journal article of mine, yesterday the BBC trumpeted that Africa is "being drained of doctors", and a separate story on BBC's French-language service implied that health professional emigration is directly responsible for deaths of Africans. (Radio France did a better job.)
All that my study says is that roughly 30% of sub-Saharan African-born doctors work outside Africa. For registered nurses it's closer to 15%.
I can understand why people might make the huge jump from these numbers to believing that there are deleterious staffing and health consequences for Africa. But don't do it. Let us do here what the reporters didn't have the time or interest to do: think clearly and carefully about the links between these numbers and the consequences for Africans.
First and most clearly, a Kenyan nurse working in London is an African who is pursuing a professional opportunity unavailable to her at home, thereby raising her salary by five or ten times. That is a good thing all by itself; African health workers are not "human resources" that can be "exported", they are human beings with families who choose to pursue dreams and aspirations that those of us already living in rich countries take for granted.
Even so, the health situation in Africa is dire and it's appropriate to consider the health consequences of the movement of health care professionals. But health conditions in Africa in fact depend primarily on things other than the total number of highly trained health care providers who reside within the borders of each African country. The toll of the biggest killers such as diarrhea, malaria, respiratory infections, and HIV depends primarily on efforts at prevention rather than care. And while care is also very important, the impact of care on those who need it depends on where the providers are, what they're doing, whom they're serving, what training they have, what resources they have at their disposal, and what incentives they face. The international movement of health care professionals does not determine these things.
Recently I was in Mozambique speaking to doctors, nurses, health ministry officials, and NGO workers. Training a Mozambican physician costs a vast US$80,000 in public funds, and roughly two thirds of physicians in the country live in or near the capital city of Maputo. If a physician leaves for Portugal, does this meaningfully affect the chance that a child will die of diarrhea in Niassa, a thousand miles away in the north of the country? And is the cost to the public coffers caused by the physician's departure, or by the spending of scarce public funds on expensive physician education in a country where roughly half the population does not access even the most basic modern medical care that a nurse's assistant could easily provide? The answers to these questions are not obvious, and they vary enormously from country to country. "Ethical recruitment", the mis-named practice mentioned in the BBC article of taking steps to block the hiring of African professionals, treats Africa as a homogenous mass because it applies to all countries indiscriminately.
If you think that limiting the movement of Ghanaian doctors is justified by the fact that Ghana doesn't have enough doctors, ask yourself: Does Ghana have enough entrepreneurs? Does it have enough engineers? Does it have enough wise politicians? The answer is 'no' across the board, so the logical conclusion of this sort of thinking is that we will somehow develop Ghana if we stand at the airport and prevent all Ghanaians with any kind of skill from leaving, preventing them from accessing the very high-paying jobs to which most of us living in rich countries have access by birthright alone. That is ethically problematic at a minimum, as well as ineffective -- trapping entrepreneurs in Ghana would not produce an efflorescence of investment.
In another paper I try to document, as rigorously I can with rough data, how some of the assumptions exemplified by the press pieces have little empirical support.
November 02, 2007
We're Ignorant About Migration And Development -- But We Can Do Better
Posted by Michael Clemens at 11:32 AM
In today's Financial Times, Martin Wolf explains why international labor movement is "hard to tackle". He starts from the premise that free, open migration is off the table:
Analyses of free migration in the presence of huge real wage differentials suggest that we would end up with vast informal sectors and shanty towns. That is what happens within poor countries. Why should it not happen across the globe? I cannot see how one would persuade a host population that this outcome would be in their interests.
This is a good question. Another good question is whether vaster and even poorer shanty towns in developing countries are even further from our best interests. South Africa collectively decided in the early 1990s that allowing free movement only to rich people, thereby caging the poorest people in pockets of desperation with the Orwellian name of "homelands", was even less in their interests than the large shantytowns one sees there today in areas once forcibly reserved for the richest. Careful observers of the world like Mr. Wolf understand, I am sure, the threats to our interests posed by laws that deny mobility and opportunity to trapped and desperate people. I think more and more people understand this.
Mr. Wolf also points out that another reason labor movement is so hard to tackle is that we know so little about it. For decades, anyone wanting to measure flows of trade or investment between any pair of countries on earth has had ready access to minutely detailed statistics in large international databases. There is no such luck for migration researchers. How many highly-skilled foreign-born professionals residing in the United States left for other countries last year? No one knows; even the countries with the largest migrant populations and the best statistics--the US, UK, and France--do not carefully track departures. This is like collecting statistics on exports, but not on imports. How many temporary workers moved back and forth between rich and poor countries in 2003? No one can tell you, because there is no standard international definition of what constitutes "temporary" migration. This is like every country on earth using irreconcilable definitions of "goods" and "services" in their trade statistics.
This is a scandal. Some of the most important contributions of the US to global development have been to give tens of millions of people born in poor countries new opportunity here, to thereby generate about one quarter of official global remittance flows, and to provide higher education to public- and private-sector leaders in developing countries all over the globe. Understanding the full impacts of labor mobility is impossible without the facts. Mr. Wolf calls for a blue-ribbon commission to analyze the state of our knowledge on migration, modeled on the prestigious Stern Review of climate change. It would indeed be a great idea to put together a similarly credible, synoptic view of the migration issue. But there would be limits to what it could say with our current data. High on the agenda of any such commission would be to suggest short- and long-term steps to greatly improve our knowledge of the fundamental facts. In 2008, the Center for Global Development will convene an experts' group on migration statistics to undertake part of this crucial task.
CGD is hosting a discussion on "Internal Migration and Poverty Reduction in Tanzania: Evidence from a Long-Term Tracking Survey" with Kathleen Beegle from the World Bank on Tuesday, November 6th.
October 02, 2007
Do We Have A 'Right' To Be Richer Than Mexican Immigrants?
Posted by Michael Clemens at 03:56 PM
Kennedy School economist George Borjas today ridicules Mexico's President Calderón for affirming a person's "right to work wherever one can make the greatest contribution." Borjas says that the hapless president listens too much to his "disingenuous" staff and has unjustifiably "invented a new 'right.'"
"One could easily argue about why it is that only those who want to migrate have 'rights,' " writes Borjas. "After all, maybe those who are in the receiving areas also have rights to decide what the receiving area should be like."
It is not helpful to set the migration discussion in terms of opposing "rights." Once one starts down that road, one quickly confronts the fact that the vast majority of people "in the receiving areas" got here by being born here, not through any merit whatsoever—myself included. And in this case, "deciding what the receiving area should be like" means actively ensuring that the vast majority of the extremely high-paying jobs in this country should be available only to ourselves and others who happened to win the birth lottery. Who exactly decided that we have that "right?" Flatly asserting that we have a "right" to average incomes eight times the developing countries' average does not mean that we indeed have that right, but only that Borjas and others enjoy asserting that we do.
At the same time, it is equally unhelpful to say that everyone on earth has a 'right' to a job in the United States, since it would be impossible for all who held such a right to instantly exercise it, and speaking of impossible rights is dead palaver. Instead of staunch but empty assertions that we have a 'right' to be richer than everyone else or that everyone else has a 'right' to be as rich as we are, it is much more useful to speak of what steps we could take to bring somewhat more opportunity to somewhat more people.
Keep the big picture in sight. International movement can bring much more opportunity to others without substantial harm to anyone. The population of the United States in 1900 was around 75 million. That was a time of intense concern about immigration: A New York Times headline on April 15th of that year warned of an unprecedented "army" of immigrants at our doorstep. Then, the fraction of our population that was foreign-born was much higher than today. The Census of 1890 had officially declared that the frontier no longer existed, and many felt that the country was simply full.
Imagine going back in time and telling the American public that, over the course of the 20th century, roughly 60 million more people were going to come and stay—that is, 80% of the population at the time, in new immigrants—plus tens of millions more who came for a while and did not stay. People would have been terrified of what that would mean to the privileged position in the world they enjoyed. Yet that's precisely what happened, and here we are today: the richest nation on earth, in the history of the earth. In the rush of paying bills it is easy to forget the enormous opulence we enjoy. All those tens of millions of immigrants have not sapped our strength; America is better than that. Rather, they have been part of that strength.
Whether I or others have a "right" to have been born here is a useless question. The more interesting question is whether or not there are ways to continue America's proud tradition of giving enormous opportunity to large numbers of people who aren't here now, without doing serious harm to ourselves. History shows conclusively that there are.
September 27, 2007
CGD Ideas and the Clinton Global Initiative
Posted by Jessica Pickett at 10:44 AM
Wednesday kicked off the 2007 Clinton Global Initiative in New York, where the development poverati mingle with the holders of the global purse-strings to "match people with ideas and those who have the means to see them through." Building on Bill Clinton's philosophy of giving (Atlantic Monthly subscription required), this year's areas of focus—education, energy & climate change, global health, and poverty alleviation—are all near and dear to our hearts at CGD, and it is encouraging to see them take center stage at such a high-profile event; in fact, many of the specific topics under discussion are closely tied to work currently being undertaken by my colleagues here, including:
- A session on strategies for young and adolescent girls features Nancy Birdsall as the moderator and draws on CGD's past work on the importance of investing in girls education, most recently including Inexcusable Absence and the accompanying case book. This is also the focus of a new project led by Ruth Levine, which dives into the literature to examine the role of adolescent girls in the welfare of families, communities and nations—and the most promising ways to expand opportunities for girls and young women. Among other strategies for donors, progress-based aid could also be used to give countries extra resources to ensure all girls receive a quality education.
- A discussion of strategies to improve maternal, newborn, and child health among a former Senator, the head of WHO and a prime minister (among others) is closely related to recent Visiting Fellow Jeremy Shiffman's work on the political agenda surrounding maternal mortality, and hopefully will touch on some of the success stories identified in Millions Saved, such as maternal health care in Sri Lanka or the National Vitamin A Program in Nepal. CGD's work on Advance Market Commitments is also prominently displayed in a related session on expanding access and fostering innovation for vaccines.
- Overcoming drug resistance takes its rightful place as a critical development challenge in a session examining the threats presented by drug-resistant strains of tuberculosis, malaria, and HIV/AIDS, and the increasing challenge of conquering these deadly diseases. Coming quick on the heels of a recent Gates Foundation grant tackling drug resistant tuberculosis, the CGI panel will move beyond just the product development process to also highlight strategies for deploying effective drugs and interventions and the importance of improving global surveillance systems. This has been on our minds for a long time (see, for example, this related post from the Global Health Policy blog), but we hope that it will assume an even larger role in the global health discourse as CGD launches a new Drug Resistance Working Group over the next few months—stay tuned!
- Also on the health front, CGI is taking the lead in addressing under and over nutrition in relation to chronic disease. Despite the relative dearth of donor attention to date, high-calorie diets and sedentary lifestyles are leading to an explosion in obesity, diabetes, and heart disease in the developed and developing world alike, often in the very same places where under-nutrition is a problem. Rachel Nugent has shared her views (and her report!) on this over at the Global Health Policy blog, and is now undertaking a research project to show how US and other rich country agricultural policies may contribute to this growing problem; her preliminary ideas were featured at a recent CGD event on "A Healthy US Farm Policy in a Globalized World."
- The plenary on economic growth in the face of resource scarcity and climate change is just one of many on the subject of global warming, but between Tom Brokaw, Tony Blair, Gro Harlem Brundtland and Hank Paulson it is certainly the one not to miss. Here at CGD, David Wheeler and others are rapidly ramping up a climate change initiative with both domestic and global implications, and hope to tie in a new project specifically looking at the relationship to population.
- A sure-to-be-controversial session on brain drain, brain gain, and brain circulation moderated by CGD board member Larry Summers tackles the intersection of higher education and migration, focusing on the impact on developing countries. Labor mobility is currently facing off against climate change as the newest and most important entrant on the development agenda, and at CGD alone we've put out two books and a number of working papers since I joined. While Give Us Your Best and Brightest and Let Their People Come are both most-reads, as a health junkie I am personally hoping that the CGI discussants have also had the chance to read "Do Visas Kill?" which challenges the current conventional wisdom surrounding the "brain drain" of health care workers from Africa.
- Latin America and the pressures of globalization is a favorite topic of Nancy's and one where she explores the relationship between economic growth and inequality and how developed countries can help reduce the risks. Giving the region's history of inequality, many of these same issues will likely be tackled in a special session on promoting growth and fairness the next day, including such luminaries as Trevor Manuel, Amartya Sen, John Podesta and Andrew Stern.
This is an exciting line-up, and CGD is exceedingly proud to be a part of it. Hopefully these insightful discussions will lead to serious commitments, and we look forward to having an equally influential role in turning these ideas into action as the commitments start rolling in.
See also: Financial Times feature section on the CGI
August 22, 2007
Can European aid halt African emigration? Forget it.
Posted by Michael Clemens at 03:45 PM
The BBC reports that European donors have unveiled a US$6 billion aid package for West Africa to "help halt the emigration of young people from the region," by creating "a Francophone West African bloc so prosperous no one will want to leave."
The idea that US$6 billion over three years will somehow make West Africa prosperous in short order is almost beneath comment. West Africa has received more than US$225 billion in aid (today's dollars) since 1960, and it is clearly not so prosperous that no one wants to leave. Serious analysts debate aid effectiveness, and I believe aid can modestly raise living standards in limited settings, but even the most sanguine researchers do not live in cloud-cuckooland, a universe in which West Africa can be "fixed" in a few years with a bag of euros.
Even if the aid could somehow cause a quick and easy jump in West African living standards, however, there is little evidence that higher incomes cause substantially lower emigration rates in the poorest countries. Indeed, when very poor countries become somewhat richer there is some evidence (pdf) from the World Bank that emigration can rise, as it becomes easier for potential emigrants to fund the costs of education, transportation, smuggling, and so on, that facilitate labor movement. Even those who dispute the evidence that emigration rates rise with incomes in the poorest countries, such as Boston University's Robert E. B. Lucas, do not find that emigration falls much with rising income.
All of this remains controversial among researchers, and economists Timothy Hatton and Jeffrey Williamson do find (pdf) that high growth in African countries of origin can slightly attenuate migration—controlling for the vast wage gaps between Africa and Europe, which have a dramatically larger positive effect on emigration. But that's the point: West Africa is very poor, and no matter what realistic degree of economic growth it experiences in the short or medium term, it will remain dramatically poorer than Europe for generations. That gap will continue to cause Africans to migrate for a very long time to come.
If you lived in a place where you had just $15 to buy your family what it needed for a whole week, would you leave? Would it change your mind if someone told you that a couple years from now you might have $16 a week instead?
Sadly, there is no quick-fix way to keep Africans from attempting the deadly journey to the Canary Islands and Lampedusa in unseaworthy craft, as there is no quick-fix way to keep Mexicans and Central Americans from attempting the risky crossing of America's southwest desert. But among the highly imperfect solutions, Harvard's Lant Pritchett has the best: give many of them a humane and dignified path to a substantial degree of economic opportunity through expanded guest worker arrangements.
June 20, 2007
The Real Immigrant Underclass: The People Who Wanted To Come, But Could Not
Posted by Michael Clemens at 07:59 AM
The New Republic's lead editorial (free registration required) blasts the now-moribund Immigration Reform Act for including a provision to admit hundreds of thousands of temporary workers each year. It bitterly condemns America's "unsavory tradition" of "importing non-Europeans to do the difficult tasks that our own citizens shun" as part of a "shadowy underclass". To the editors, this is "the tradition of the African slave ship, the Chinese coolie, and the Mexican bracero" and is "one of the worst ... instincts in American democracy".
I take a breath and count to ten. First, and emphatically, we must set the brutal, coercive slave trade completely and irrevocably apart from Chinese and Mexican immigration, which has been almost universally voluntary. Forcing Africans to come to this country and work for nothing was indeed far beyond unsavory and it did reflect, in its time, the worst instincts of this country. A colossal difference lies between this and the braceros' decision to come here and work for pay. Slaves were indeed "imported" as subhuman commodities. Mexicans and Chinese chose to come. And allowing people to voluntarily pursue their dreams is not something for which we should hang our heads in shame.
Now: What is the alternative to admitting Chinese and Mexicans to do "difficult" work here in a "shadowy" underclass? The alternative was not mass admission of unskilled labor with full citizenship, which would have been politically impossible and continues to be. For most of them, the alternative was not to come at all, and the temporary worker provision of the Immigration Act embodies a sophisticated understanding of this fact. If the US had not admitted Chinese and Mexicans in the past, those people would have remained where they were: doing far more difficult work in a sub-sub-underclass in the places they came from --- not just shadowy, but completely invisible to Americans. How do we know it was that bad where they were before? Because despite the enormous hardships of coming here, both groups kept on choosing to come, for many decades. Immigrants, bluntly, are not stupid; they know what makes them better off, and they act on it.
The failure of the Immigration Reform Act means no temporary worker program, so fewer people will have that chance for a better life. The way the editors of the New Republic excoriate that provision of the bill, you'd think the bill's collapse is a victory in the fight against poverty.
Those editors would appear to prefer that the non-Europeans who have been afforded tremendous opportunities to improve their lives here had stayed home and kept their desperation out of sight, out of mind --- as the bill's failure ensures many more will. If the New Republic didn't prefer this, it might point out that admitting Chinese and Mexican laborers is precisely the act of setting them free from the very, very "shadowy underclass" in which they lived prior to coming here, when most did much more "difficult" work for a lesser reward. It might note that giving those enterprising people a chance is one of the best "instincts in American democracy", one that is not emulated by other rich democracies like Japan.
It might also point out that it was the precisely the halting of Chinese immigration, via the unapologetically racist Chinese Exclusion Act of 1882, that indeed reflects our "worst instincts". Was that law any less repugnant because building railroads is "difficult" work?
This doesn't mean that there are no problems with immigration and assimilation here; those need to be solved. But let us not patronize the migrants. "Saving" them from the conditions they face here, if that means sending them home or not admitting them, means "saving" them from something they have told us loudly that they prefer --- by voting with their feet. Full and immediate citizenship for hundreds of thousands of unskilled Mexican laborers a year is politically infeasible, and the temporary worker program was a great shot at an outcome that still would have made a lot of people better off. Now we face the alternative, which is that those people will never have the chance to come, or will try to come through very dangerous and harmful illegal channels. The New Republic might like the sound of that, but I don't.
Whatever you think of how America has handled the people it did let in, the fact is that it did let them in, and many other countries simply have not and do not allow as many people to better their lives in this fashion as we do. That is a distinction of which we can be proud. It is light years away from the slave trade. The death of the Immigration Bill and its temporary worker program means more people will be "saved" from the chance to pursue their dreams and see their hard work better rewarded. Now there's something to be ashamed of.
June 11, 2007
Lant Pritchett in the Times: A Wild Migration Idea Whose Time - Already Came
Posted by Michael Clemens at 03:48 PM
Yesterday the New York Times profiled Lant Pritchett and sketched his proposal to create 16 million guest-worker jobs in rich countries for people from poor countries. His goal is to help people from very poor places make their lives better. The Times piece (subscription may be required) politely leaves the impression that this "eccentric" idea is "ahem, ahead of its time", and that poor Lant is in the grips of an impossible "panacea". Some of the interviewees go as far as to suggest that the whole shebang is darkly immoral.
By itself this reaction doesn't mean much; no idea that is new and important escapes it. Ben Franklin's eccentric petition to abolish slavery outright in 1790 was openly ridiculed in Congress on a long list of practical and moral grounds. Let's look beyond the gasps, then, and look this proposal straight in the eye. Here are a few things you might notice:
1. What we have today looks a lot like it
Lant's proposal involves creating three million jobs in the U.S. for guest workers who would not have full citizenship rights. The Times article derides this as "a Saudi Arabian plan in which an affluent society creates a labor subcaste that is permanently excluded from its ranks." Unfortunately this is not the Saudi plan, it's the American plan, today, now. In the 1990s, about 350,000 unauthorized workers entered the country every year (pdf). In other words, over that decade, America took in three million low-skill workers with no citizen rights and, thanks to the recent failure of the immigration reform bill, little prospect of such rights. They were made much better off, the countries they came from were made much better off, and the U.S. remains the richest and most powerful country on earth. What exactly is so bizarre or outsized in Lant's "eccentric" idea?
2. It has worked in the past as a development strategy
Is it wild to think that sending poor people abroad could be part of a country's development strategy? It wasn't just Ireland that did this in the past; poor people moved out of Germany, Spain, Italy, Sweden, Scotland, Greece, Portugal, and other now-rich countries at vast scale back when those places were poor. My great-great-great grandfather Nicholas Clemens did not come here in 1854 to try the whisky. He came because he was a destitute farmer and Bavaria held little opportunity for an unclassed, unschooled peasant. His departure eased the situation for other Bavarians.
Could rich countries' borders again be open enough to allow such movements? For most of America's history there were very few restrictions on who could enter. Our current system of passports and visas is a 20th century invention. When Nicholas Clemens wanted to improve his life, he simply showed up here and got to working--hard. Obviously the consequences of openness are complex and would be different now than in the 19th century. But to consider more open borders impossible or unthinkable is simply myopia. We have experience with this.
Imagine telling the 76 million Americans in 1900 that over the subsequent century, 47 million foreigners would enter their country. Back then, the foreign-born were already an even higher fraction of the population than they are today. Americans then would have been aghast, as we would be today if someone said that 184 million more foreigners were darkening our doorstep over the decades to come (the same proportion of today's population as 47 into 76). Yet that's exactly what happened over the 20th century, and here we are, the richest nation in all the earth and in all history.
3. Migrants understand what's good for them better than you and I do
Some of the experts interviewed by the Times blast Lant's proposal because it would result in the separation of families while guest workers are abroad. One goes as far as to make a moral analogy between temporary labor movements and illicit trafficking in human organs. Funny how Singha Madur and his son, Nepalis interviewed in the Times article, don't seem so sad that they had to be separated for a few years so that the son could make 10 times the local wage abroad. Apparently migrant families have decided that securing their material well-being is more important to them than short periods of separation. Any moral judgments we might make of their choices, perched as we are at the pinnacle of global wealth, fall flat.
Bottom line: Lant Pritchett's proposal is not the magic bullet that will "develop" the low-income world. That doesn't exist and never will. What Lant is proposing is analogous to using ten spaces in a partially-full lifeboat to save ten people from the Titanic, out of a hundred people left on board. Don't tell him that the boat can't hold ten more; other boats have done so before. And it rings hollow to criticize him for failing to save the other 90. The alternative isn't saving all 100, because our tools for doing that from the outside are weak and slow. The alternative is consigning all 100 to their fates, and rowing away.
June 04, 2007
Remittances as "philanthropy": The worst development idea I've seen this year
Posted by Michael Clemens at 02:34 PM
The latest Hudson Institute "Index of Global Philanthropy" just came out. It makes a very important point: that the United States gives an enormous amount of private, voluntary cash assistance to people in developing countries, far in excess of its official aid. Indeed, it shows that Americans give more to poor countries via private channels -- as a fraction of national income -- than any other rich country. They also give more privately (about $33 billion in 2005) than they do through public aid mechanisms (about $28 billion in 2005). We should think a lot about how other countries might follow the U.S. lead on in this regard, and how those donations might be better used.
Unfortunately, this valuable point is helplessly crushed under the weight of a big, ludicrous blunder that this same report makes, year after year. Beyond the $33 billion that Americans give in private transactions, legitimately called donations, the report includes $62 billion of workers' remittances in Americans' "total assistance" to poor countries (Chart 5). In other words, the Hudson Institute believes that about half of Americans' "global philanthropy" comes from workers' remittances. The report includes that money in a list of ways that Americans have responded to the "call to alms" (pp. 19, 23). This is one of the most worthless claims in the entire development field. Let's toss this idea on the dung-heap where it belongs, once and for all.
What is a "worker's remittance" anyway? Take the case of José Edgardo Andrande, a Salvadoran who works in construction and other jobs in the United States. He sends or "remits" about $700 a month home to support his two sons and his mother. He was the subject of a recent New York Times article.
My parents worked for many years to support their two sons (yup, I mean me), and helped out their elderly mothers too, just like Mr. Andrande. The money they spent clothing and feeding me and sending me to university was simply paying the bills, a small part of which they could deduct from their taxes via the dependent allowance. It most certainly was not a 100 percent tax deductible charitable donation. Why not? Because helping relatives is neither "philanthropy," nor "assistance," nor "alms." It is a transfer within a household, broadly considered, and it is part of the reciprocal relationships present in every household on the planet. The support my mom and dad gave me would not magically have become charity if it had happened to cross an international border, as Mr. Andrande's does. (Even if it were, Mr. Andrande's decisions have nothing whatsoever to do with Americans' generosity; he is not American.)
If you can swallow the Hudson Institute’s logic on this one, then anyone who ever raised a child or helped a relative is a “philanthropist.” Unfortunately, if everyone on earth is a philanthropist, then no one is. David Roodman and others have made this point before.
But aren't we "generous" for giving a Salvadoran like Mr. Andrande a job? The construction companies and restaurants that have employed Mr. Andrande in the United States did not choose to employ him instead of a U.S.-born person due to their interest in the welfare of Mr. Andrande's sons and mother. They employed him because of the low wage he accepts, and its effect on their profit margins. The same employers might also give to charities, but that has nothing whatsoever to do with Mr. Andrande's job. The tacit weak enforcement of U.S. border controls does not constitute "generosity" either; it is the outcome of domestic labor shortages and domestic political struggles entirely divorced from development concerns. The simple fact is that nothing at all about the money Mr. Andrande sends home involves any donation or generosity by any American, ever.
The Hudson Institute's claim that U.S. overseas "assistance" to poor countries is $123 billion per year, or almost 1 percent of national income, deserves only to be ignored and forgotten. Using their figures (assuming they are correct) without remittances, assistance is $61 billion, or 0.49 percent of national income. This is still a lot more than official aid, and it is worthwhile for the Hudson Institute to point that out. Such a useful message would come through more loudly and clearly if they would drop their flaming gaffe from next year's report.
May 01, 2007
Who Knows What's Best for Migrant Workers? The Workers Themselves!
Posted by Michael Clemens at 05:59 PM
You might have seen a recent New York Times Magazine cover story (subscription req.) about Filipinos working overseas. It is a colorful portrait of what life has been like for the Comodas family, two generations of which have worked abroad. The article describes challenges the parents faced in migrating internally from Leyte and Cavite provinces to a fetid slum in the capital, Manila, and how father and children’s subsequent leap to contract work in Saudi Arabia and United Arab Emirates has brought protracted separation of the family, intense loneliness, and risks to personal safety.
The author, Jason Deparle, recognizes the comparatively enormous salaries that Emmet Comodas and all five of his children have earned abroad, but urges us to remember that “competing with the literature of gain is a parallel literature of loss.” Any good journalist lays out the pros and cons of phenomena, inviting readers to reach their own conclusions. But one straightforward fact should stare any reader directly in the eyes: The Comodas family has reached its own decision about whether the gains are worth the losses. They have decided that the losses do not even come close to paralleling the gains, and their conclusion matters infinitely more than yours or mine.
Not everyone trusts the Comodas family’s decision about what’s best for them and their children. The otherwise superb economist Dani Rodrik posted on his blog a short comment titled 'The downside of labor mobility'. He concluded: “What the article makes clear to me is that we have not yet figured out how to make international labor mobility a true contributor to economic development.”
This claim is nothing short of bizarre. If “economic development” is not that which brings enormous lasting welfare improvements to families unlucky enough to have been born in poor countries, then what, exactly, is it? Would additional factory jobs in Manila constitute “development”, even if Emmet were much worse off working there than if he worked abroad? He and his family have answered this question by voting with their feet.
Emmet Comodas’ salary in Saudi Arabia was ten times what he could have earned at home. He and his wife Tita invested the extra pay in food, medicine, and school supplies for their children. Though neither Emmet nor Tita had finished high school, four of their five children now have college degrees. Deparle grimly notes that “Emmet, overseas paying the bills, missed every graduation”. So what? Evidently Emmet and Tita decided that it would be better for their children if Emmet were absent at their children’s college graduations than present to watch them drop out of high school only to perpetuate their family’s poverty. Who are you and I to tut-tut them for this decision? Would you take Emmet’s advice on what’s best for your kids? Or should we have interceded with Emmet’s Saudi employer to limit how much time Emmet could spend in the Gulf? He would most certainly not appreciate our ostensible good will toward his children.
The article also makes much of anecdotes regarding threats to migrant workers’ personal safety. The question is not whether there are risks --- there most certainly are, everywhere, and they should be reduced where possible. Rather, the question is whether the risks to Filipinos in Singapore or Abu Dhabi are greater than the risks to them from gangs near Emmet’s original home in the slum of Leveriza, or whether the risks in Emmet’s ancestral home of rural Leyte are outweighed by those in Leveriza. Leyte is apparently not an Eden of personal security: Something --- the article doesn’t say what --- killed both of Emmet’s parents there when he was young. Both Emmet’s family and Tita’s made decisions about what the relative risks were between a rural and an urban life, and Emmet and Tita made decisions about the relative risks between Manila and life overseas. All of these decisions were made with vastly greater information than you and I have --- or can have.
Emmet and Tita Comodas understand what is best for their marriage and for their children’s welfare. Lasting, unmistakable improvements in that welfare are development of the Philippines, because the Philippines is Filipino families. The opportunity afforded to Emmet and his kids by migration to the Gulf region unquestionably raised their welfare. If it hadn’t, Emmet wouldn’t have signed up again and again for repeated contracts abroad, and he never would have permitted his children to follow suit. Beyond all that, the education his children received can only contribute to building industries and accountable government within the Philippines that will make other Filipino families better off as well.
If temporary work programs like those that unquestionably, dramatically raised the welfare of the Comodas family are not “true contributors” to economic development, I’d be interested to know what “true” development is. If there is a “literature of loss” on Filipino overseas workers, it isn’t being written by Filipinos, who are writing a different literature --- with their lives and their choices.
March 08, 2007
President Bush in Latin America: Democracy, Social Justice and a Dollop of Aid
Posted by Nancy Birdsall at 09:33 AM
President Bush is going to Latin America, and that has inspired a round of commentary in the mainstream press. A New York Times editorial urges the President to focus on democracy, human rights and social justice, and applauds the recent doubling of U.S. aid to the region. Democracy and social justice and a dollop of aid (the current budget of $1.6 billion is barely 1 percent of spending by Latin governments on health and education) are good things. But from President Bush they are bound to come across as mere sound bites (as even the editorial writer seems to acknowledge) given the level of distrust and cynicism about this Administration in the region. Worse they will seem a hapless answer to President Chavez of Venezuela's practical steps to buying allies - making a market for Argentina's bonds, issuing fat contracts to Brazil's largest construction contractors, and ensuring cheap access to oil and highly trained Cuban doctors for Bolivia.
The Washington Post got the story closer to right: Bush should make some real commitments, especially to governments that are on board with the U.S. ideologically, but aggrieved by U.S. indifference and pressured by renewed forces of populism and protectionism. He should tell the Brazilians he will fight the farm lobby here to reduce tariffs on sugar-based ethanol (and sugar for that matter); should work with the Democrats in Congress to pass the free trade agreements with Colombia, Peru and Panama; and should actually put some White House muscle behind an immigration bill to resurrect good relations with Mexico (the main point of Jorge Castaneda's Washington Post column).
But something is still missing - a message for the people of the region - especially the poor majority who support Chavez in Venezuela, Morales in Bolivia, and Ortega in Nicaragua, and came close to electing López Obrador in Mexico and Humala in Peru. Latin America's poor majority has been victimized by centuries of inequity and injustice (a forthcoming CGD book, Fair Growth: Economic Policies for Latin America's Poor Majority, further develops this idea. See also, Washington Contentious: Economic Policies for Social Equity in Latin America) and looks to the U.S. as a place where the little guy can get ahead. President Bush should brag about that aspect of American life, and ask his hosts how North Americans can help Latin America create societies where social mobility reigns. I doubt the answer will be confined to aid and sugar and more rights of legal entry. It will also be about access to credit and mortgages (help on mortgages and housing was a smart idea); locally accountable education systems; reducing tax evasion; and supporting small business. It will be about building societies like the U.S. - far from perfect, but mostly fair as well as free.
October 19, 2006
María and José Know How to Spend Their Remittances
Posted by Michael Clemens at 04:31 PM
Nearly every time there is a news story about the billions of dollars flowing to poor countries as remittances, someone worries that not “enough” of that money is being saved and invested. A case in point is today’s piece in the Washington Post. Latin American workers in the US will send home $45 billion this year, but “only a small portion … has gone to economic development.”
Where does it go instead? Primarily to consumption -- but is there anything wrong with that? The article points out that “only … 15 to 20 percent” of remittances are saved and invested by the households that receive them. But only around five percent of non-remittance income of poor households in Peru, for example, is saved and invested. What do low-income Peruvians spend that money on instead? Food, rent, and transportation, mostly. Why should we expect them to spend money differently according to the country their primary provider happens to work in?
First, notice that they do save and invest more of remittance income than other income. Second, if they don’t save and invest more than 15 or 20 percent of it, there’s probably a good reason for that. Perhaps it’s the poor investment climate in Peru, which Hernando de Soto has spent years quantifying and publicizing. Remittances go to countries that people leave; people leave countries where the return to capital is low. By definition, little will be invested in those countries. No “remittance policy” can do much to help that until the fundamentals get better.
The best policy to get people to save and invest more remittance (or any other) income is to make it pay for them to do so. Greater investment of remittances will arise from improved returns to investment in developing countries, not primarily from schemes to try to convince migrants' families to invest when they'd rather not. Contriving such schemes and associations tends to assume we know what's good for those families better than they do. Do you?
September 12, 2006
McPassport to Labor Mobility! (Seriously!)
Posted by Lawrence MacDonald at 07:23 PM
Hat Tip to the PSD Blog for an intriguing story that the mainstream media almost entirely missed today. The president of McDonald's Europe announced in Brussels plans to issue European McDonald's employees a "McPassport" -- a new type of document that could greatly increase the labor mobility of its 225,000 European employees. Christine Bowers at PSD Blog writes:
The McPassport (I'm not making this up) makes its easier for employees to move to another of the roughly 6,000 McDonalds locations in Europe. The document contains detailed information on the employee - such as positions held, dates and salary history - although he or she will still go through an interview before hiring.
I thought this might be a hoax, except that the TheParliament.Com is quoting EU employment commissioner Vladimír Špidla as welcoming the initiative:
“This initiative by McDonald’s is an excellent example of interaction between the creation of a policy and its implementation on the ground,” Špidla argued – although he noted that the company in question is American, not European.Špidla said that EU governments must urgently work on promoting mobility among their workers – according to commission estimates, two to three million jobs across the EU are not filled in great part because of the lack of mobility among the continents’ workers.
On Friday CGD will release a new book, Let Their People Come: Breaking the Gridlock on Global Labor Mobility, by non-resident fellow Lant Pritchett that argues provocatively (and to me persuasively) that rich country labor markets should be much more open to low-skilled workers from the developing world. Global corporations may turn out to be some of poor people's best allies in pushing for greater labor mobility. Can a global McPassport be far behind?