Migration has positive impact on advanced economies, IMF says

Movement of workers boosts global output, raising world gross domestic product

An asylum seeker, cooks in a temporary reception centre in Bosnia. Bosnia and Herzegovina lies on the Balkans route that refugees and migrants use to reach EU member states. Source: UNHCR

The migration of workers from low-income countries to developed economies has a positive effect on global economic growth, the International Monetary Fund said.

"Immigration into advanced economies increases output and productivity, both in the short and medium term, but these positive effects are not clearly detected for refugee flows in emerging market and developing economies," the fund said in a chapter of its World Economic Outlook set to be released on June 24.

About 270 million people in the world were classified as migrants in 2019, with the number having increased by 120 million since 1990.

While migrants have accounted for about 3 per cent of the world's population over the past six decades, their number as a share of the total population of advanced economies rose from 7 per cent to 12 per cent during the same period.

The coronavirus pandemic halted migration as countries locked borders and enforced movement restrictions – a move that could possibly have a significant long-term effect on their economies.

Conflict is an important driver, prompting large-scale movement of people from war-ravaged developing economies to neighbouring countries.

The IMF said the share of migrants relative to the global population will remain “broadly stable” under a baseline scenario. However, the share of migrants moving to advanced economies will expand relative to the population increase in emerging economies.

Climate change will also be an instigator of long and short-distance migration, the fund said.

Continued large-scale migration is expected to contribute to output and productivity growth in advanced economies in the short and medium term.

However, refugee flows into emerging and developing economies do not appear to produce similar gains, the multilateral lender said.

According to the IMF, labour market policy focused on the vocational training and education of immigrants could boost macroeconomic gains.

It also called for international financial support and policy co-ordination measures to address refugee crises and support the integration of refugees within host countries.

The effect of migration on global output is positive due to increased productivity in the case of labour movement from low- to high-productivity countries.

“An additional, but small, contribution to global GDP comes from the gradual closing of the productivity gap between immigrants" and host populations, the IMF said.

The trend is also expected to improve the skills of host populations.

Emerging and developing economies also receive a boost to per capita income from remittances sent from abroad, helping offset some of the negative effects of large-scale emigration.

The IMF’s note on the economic contribution of migrants comes after a call by the UN’s Food and Agriculture Organisation for their rights to be protected.

The coronavirus pandemic left migrant workers, who form an integral part of the agriculture industry in advanced economies, impoverished while host countries were affected negatively.

“Migrants play a substantial role in agri-food systems. Measures affecting the movement of people [internally and internationally] and the resulting labour shortages will have an impact on agricultural value chains, affecting food availability and market prices globally,” the FAO said.

For instance, the pandemic forced European economies to recognise migrants from Eastern Europe as critical workers.

Special flights were arranged to enable the movement of seasonal workers from poorer parts of the continent into countries such as France to help with fruit picking, harvesting and other agriculture-related functions.

However, as incomes grow in emerging and developing economies, the movement of workers across borders may be reduced.

“This is not necessarily the case for poorer countries, like those in sub-Saharan Africa, where rising [though still low] incomes may enable more people to emigrate,” the IMF said.