Download Emigrants and Institutions

EMIGRANTS AND INSTITUTIONS
by Xiaoyang Li and John McHale
September 2009
Stéphanie Carret
&
Jinjie Cui (Eric)
Faculty of Economic Science
University of Warsaw
26th November, 2009
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Development Workshop
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The Planning for today
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Review of the paper: main ideas
Analysis of illustrative graphs
Other views on the subject
What questions can we raise?
S.Carret & J.Cui
Development Workshop
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Review of the paper: Dataset
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« Impact of skilled emigration on any given measure of
institutional quality is clearmy an empirical question given
these many channels of influence »
World Bank data on emigrants stocks, used by Docquier and
Marfouk in 2005: surveys from all OCDE countries on the level of
educational attainment of migrants
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Emigration stocks data for 195 countries in 2000
Barro-Lee measures of domestic human capital
World Bank governance indicator
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Data measures 6 dimensions: Voice & accountability, Political Stability
(which account for political institutions); Government effectiveness,
Regulatory Quality, Rule of law and Control of Corruption (which account
for economic institutions)
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Review of the paper: main
ideas
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The main question is to examine through which channels
internationally mobile human capital can influence domestic
institutionnal development, through economic & political institutions
Essential for the development of the country
The authors make a test in order to see the influence of emigrant
human capital, among the domestic human capital
 They also try to avoid the reverse causal effect by lagging values
during their testing
 Use of other variables for changing institutions on top of emigration
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GDP per capita, trade openness, Catholic & Muslim affiliations, ethno
linguistic separations, country’s grography: used as controls
Strong link between geography and emigration
They find out that larger emigrant capital stocks enhance the
quality of political institutions but lower the economic ones
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Causal channels for skilled
emigrants and institutions
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Causal channels for skilled
emigrants and institutions (2)
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Absence channels
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According to Hirschman, emigration is depriving the « geographical unit that
is left behind…of many of its more activitst residents, including potential
leaders, reformers or revolutionaries », thus « weakens voice »
Safety valve: release pressure for democratic reform
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Example of Greece, Portugal and Spain in the 1960’s, and 1970’s
Prospect Channel
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If there’s a threat of too much «exits », the remaining elites have a
bargaining power; governments can have different reactions
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East/West Germany in the 1950,s : first, « safety valve » relief, then the
Wall and authoritarian regime imposed
Ireland in the 1950’s: increase of rural emigrants => decisive turn in
economic policy: it initiated a series of reform
If big prospect for emigration: there is brain gain (investment in HC) if some
people investing end up staying
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Causal channels for skilled
emigrants and institutions (3)
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Diaspora channel
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« Loyalty » connection (Hirschmann): links of emigrated national with the
home country
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Trade, invest, remit, share infoand participate in domestic politics
Those ethnic networks influence the shape of political and economic
evolution and represent a source of economic advantage
Role of Czech and Slovak Americans in creation of Czechoslovakia
BUT pb of diaspora nationalism in the receiving country (and amplified
violence in home country)
Return channel
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Source of supply and demand for better institutions
Increased productivity & knowledge abroad: transformative effects
Spillovers of Latin America technocrats in their home countries
Destabilizing force: energy for change BUT troubles with natives
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Analysis of illustrative graphs (1)
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Analysis of illustrative graphs (2)
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Analysis of illustrative graphs (3)
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Analysis of illustrative graphs (4)
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Analysis of illustrative graphs (5)
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Another view - Brain drain &
economic growth: human capital,
another condition for growth
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« Brain drain and economic growth: theory and evidence », by M.Beine,
F.Docquier, H.Rapoport, in Journal of Development Economics, 2001
Focused on the impact of migration prospects on human capital
formation and growth in a small, open developing economy
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2 growth effects: ex ante « brain effect », ex post « drain effect »
Beneficial Brain Drain emerges when the Brain effect dominates
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Average level of human capital is higher in an open to migrations economy
than a closed one (because increasing human capital is more valued abroad
than in the home country: incentive to invest)
Concept related to modern theories of endogenous growth, where
the link between education, migration and growth is renewed
Migration prospects play an important role in education decisions
Impact of selective immigration policies in the host countries
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Which impacts on growth in the source country?
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What questions can we raise
Debate
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If international labour migration can influence
institutionnal patterns in the home country
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What about the economic development (the paper says
economic institutions are not as impacted as the political ones)
Let’s talk remittances impact
To enlarge the debate quickly talked about in the
paper: what about the influence of institutions on
migration?
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The case of the Philippines: from the 70’s, government
promoted capital mobility of its citizens
Can you think of other cases?
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Source:
Paper:
“Emigrants and Institutions”, by X.Li and J.McHale, Sept. 2009
Internet:
Scholar Google
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Questions
?
Thank you.
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Development Workshop
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