Economic Crises and Migration: Location, location, location

This morning's International Conference on Diaspora for Development featured an excellent discussion led by Hans Timmer, director of the World Bank's Development Prospects Group, and Dilip Ratha, lead economist and author of the Bank's migration blog. Messrs Timmer and Ratha discussed the impact of the crisis on migration patterns and remittance flows, providing several key insights.

First, to quote Ratha, "The more we learn about remittances, the more we realize how little we actually know." Overall remittance values are difficult to predict due to the size and informality of the sector.

That said, here is the 2008-9 outlook on remittance flows:

• Total estimated remittances for 2008 were $328bn
• Remittance flows in 2009 are expected to drop by 7-10 percent. This negative growth trend began in September 2008
• Paradoxically, remittances have become a more important source of external financing in many countries, as foreign direct investment has dropped by up to 50 percent

Some of the most interesting discussions dealt with the geographical patterns of migration. For example, South-South migration is more common than South-North. Bangladesh-India is likely to supplant Mexico-United States as the world's largest migration corridor. 

What do these patterns mean in light of today's economic environment? 

The obvious lesson is that if migrants follow the crisis, it is likely to find them. 

Take, for example, the case of Latin American migration to the United States. Because such a large share of Mexicans and Central Americans head north, the recession in the United States will have a strong negative impact on the volume of remittances to Latin America.

To contrast, Bangladeshi migrants to India (and the oil-rich GCC countries) will face less hardship simply because their host countries are less impacted by the crisis. Positive GDP growth in India and parts of the GCC has led to consistently positive South Asian remittance flows throughout the crisis. 

Day two of the conference features a series of national case studies of migration, as well as presentations on financial instruments that can be derived from remittance potential, such as diaspora bonds.

To stay updated on the future patterns of migration, check out the World Bank's Migration and Remittances Prospects page. To follow the conference live, check out our webcam.