New LDC report examines migration patterns and braindrain

20 December 2012

UNCTAD released it latest annual report on least-developed countries, subtitled Harnessing Remittances and Diaspora Knowledge to Build Productive Capacities, in late October 2012. This year's special focus on the effects of migration contains some little-known facts.

Migration patterns

The number of LDC emigrants rose from 19 million in 2000 to 27 million in 2010. Contrary to the wide-spread perception that LDC citizens move from South to North, four-fifths of the emigrants live in developing countries. University-educated people are an exception, however, with two-thirds heading to the North.

The contrasting trends can be partly explained by the fact that developed countries tend to accept skilled immigrants, but increasingly erect barriers to exclude the unskilled. An astonishing 83 percent of Haitian college graduates leave their country, followed by Samoans (73 percent), Gambians (68 percent), and Tuvaluans (65 percent). A third of these emigrants live in the US.

In 2000 (the last year for which data are available), high-skilled migrants accounted for one-fourth of total emigration from LDCs. This is 11 times higher than their 2.3 percent share in the total labour force of these countries.

Brain drain and remittances

"Brain drain," i.e. the emigration of university-educated people, is measured by the number of high-skilled emigrants as a share of all nationals with the same education level. Collectively, LDCs have the highest brain drain rate among the world's major country groups, averaging 18.4 percent, much higher than other developing countries (10 percent). Six LDCs have more high-skilled professionals living abroad than at home: Haiti, Samoa, the Gambia, Tuvalu, Kiribati, and Sierra Leone.

The main drivers of brain drain are higher income, better working conditions, career prospects and immigration policies of the host country, adverse political and economic situations in one's home country and lower migration costs.

The number of high-skilled international migrants climbed from 16.4 million in 1990 to 26.2 million in 2000 (the latest year for which data are available). When the 2010 figures are finally released, they are expected to show a sharp increase in the volume of high-skilled international migration. The major regional source of high-skilled LDC emigrants is Asia, home to 45.9 percent of tertiary educated migrants, followed by African LDCs, which account for 40.4 percent of LDC brain drain.

While brain drain can be damaging to home countries that lose their best-educated people, it also has beneficial effects, as witnessed by the remarkable increase in remittances (i.e., money that emigrants send back to their home countries). These grew almost eight-fold between 1990 and 2011: from US$3.5 billion to US$27 billion, and have continued to rise since 2008 despite the onset of and fallout from the world financial and economic crisis.

While remittance receipts expanded significantly in all regions, the rise in global remittances is chiefly driven by a surge of inflows to developing countries. South-South remittance flows are particularly important to LDCs. In 2010, it was estimated that as much as two-thirds of their recorded remittances originated in other Southern countries.

For nine LDCs, remittance flows exceeded receipts of both foreign direct investment (FDI) and official development assistance from 2008 to 2010. This was the case for Lesotho, Senegal, Sudan, and Togo, as well as Bangladesh, Haiti, Nepal, Samoa, and Yemen. Africa also accounts for the near totality of states where LDC remittances over the same period surpassed FDI. Kiribati was the only "outsider" in a group composed of Benin, Burundi, Comoros, Ethiopia, Gambia, Guinea-Bissau, and Uganda.

Economic performance

True to tradition, the UNCTAD report also reviewed key economic indicators.

In 2011, LDCs grew by 4.2 percent, 1.4 percentage points lower than the preceding year despite a notable 23 percent increase in exports. The total value of merchandise exports in 2011 (US$204.8 billion) was twice as high as five years ago.

Overall, LDCs' merchandise trade shifted into surplus in 2011 after two years of deficits. The positive result for the group was due entirely to African countries and their surplus of US$21.4 billion, largely driven by Angola.

More than half of LDC exports were destined for developing countries in 2011. China accounted for more than one quarter of these, surpassing both the EU and the US. Sixty-two percent of exports from the 48 LDCs originated from just five countries: Angola, Bangladesh, Equatorial Guinea, Yemen, and Sudan. Oil generates 46 percent of LDCs' total export revenues.
LDC exports also benefited from higher international commodity prices. In the summer of 2012, food prices, in particular for maize and wheat, were once again on the rise due to drought in major producing countries. However, higher prices will negatively affect many poor people in LDCs, who generally spend 50 to 80 percent of their income on food. The situation in some parts of Africa is critical, as food insecurity threatens the lives of hundreds of thousands.

Official development assistance (ODA) disbursements, together with net debt relief to LDCs, reached a record level of US$44.8 billion in 2010, an 11 percent increase over 2009. In nominal terms, aid inflows were 3.5 times higher in 2010 than in 2000. While data for 2011 are not yet available, there are signs of a decrease in ODA from some donor countries.

Next year, however, look less promising. As of mid-2012, economic activity has slowed in many parts of the world. As a consequence, LDCs' short- to medium-term prospects are somewhat weak. Thus, a relatively prolonged period of uncertainty - along with a possible escalation of financial tensions and real economic downturn - is likely.

The full report can be accessed at http://bit.ly/Zi5KYj.

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