Development Not Aid
A study showing the economic benefits of seasonal migration
Much obvious work on helping the poor may actually be beside the point. As good as supplying clean water and building schools is, giving people honest work tends to be the true way out of poverty. Give a man a fish, fishing rod etc. Thus, while the West makes a show of providing development assistance, the real steps it could take to help are actually much more simple. Cut agricultural subsidies for wealthy farmers and allow easier immigration from the developing world. Both of these options, however, are politically toxic whereas everyone generally likes giving out medicine and assorted largess. It may, however, be besides the point.
Subsidizing Underdevelopment
In Sri Lanka we import rice and one of the most popular local dishes is tinned fish curry. This is tinned as in from a can, as in from a container, as in from somewhere else. I eat this somewhat regularly and I live about 1 km from the sea. There is also a fish market at the top of my road, but the tinned fish is cheaper. That is somewhat off topic here, perhaps even detrimental to the topic. I digress. It’s just that I ate tinned fish today and I don’t really like it.
For all the talk of free trade, farmers in the west are still heavily subsidized. As Mark Malloch Brown, former head of the United Nations Development Program, says “It is the extraordinary distortion of global trade, where the West spends $360 billion a year on protecting its agriculture with a network of subsidies and tariffs that costs developing countries about US$50 billion in potential lost agricultural exports. Fifty billion dollars is the equivalent of today’s level of development assistance.”
In the US you see it in the weird promotion of food based ethanol as an energy source (something dumb), based largely on the fact that politicians need the support in grain belt areas like Iowa. If you take the subsidies away its a huge political hit without much local gain, but as the system is it produces huge market distortions. On one level, stuff like corn syrup becomes cheap and leads to bad cheap food that makes the west fatter. On the other level, farm subsidies essentially take away agricultural work from the developing world and replace it with aid which employs even more westerners.
It’s understandable, but still a bit bullshit. If western countries were serious about both poverty and free markets, they’d look at reducing agricultural subsidies. They generally don’t.
Immigration
Humans have been immigrating literally since we walked out of Africa. Immigration is probably the basic mode of getting out of poverty, or hunger as it were. In the age of the nation state, however, immigration is viewed as something unnatural and illegal. Western countries let in migrants, but the phenomenon is often viewed as a negative thing. In a broader view, this is really just old migrants looking down on new ones, but migration does have societal effects on the good things about nation states.
Immigration, however, is the best way for people in the developing world to get out of poverty. It is a policy which every Sri Lankan understands. People smuggle on boats, overstay their visas or even pretend to be a non-existent handball team to get off the island and into a better life. And they generally do. And they send money home. Sri Lanka has something like a million people working abroad now, supporting countless people back home.
Now, a recent study in New Zealand has shown the striking effect of seasonal migration on Pacific Islanders (John Gibson, David McKenzie). As you can see from the graph above, the income gains dwarf microfinance and cash transfer. As the study puts it, “The vast wage differences across countries are a sizeable economic distortion, and offer the possibility of large gains through international migration”. In that way, development aid may be sowing unfertile soil. In my experience poor people generally ask for 1. a job or 2. a way to migrate. They may be right.
Development
Development, especially development studies, tends to be populated by somewhat leftist types, in my experience. They approach it from a moral imperative, which is good, but it may not necessarily be efficient. Viewed from a pure results perspective, development is not about feeding starving children or building schools or saving lives. Those are the effects of development, but it’s not development in itself. Development is actually about, as the authors of the New Zealand study put it, evening out economic distortions. In that sense, the largest gains come not from clean water or education but from creating jobs and enabling migration when there aren’t jobs.
See, the world already has a reasonable system for lifting people out of poverty. The basic model is to simply move and the extended model is to move goods and services. That is, free movement and free trade. The emergence of the nation state as an economic and psychological entity has placed limits on that, but judicious lifting of those limits may have better results by ignoring the general economic distortions and airlifting specific solutions in. For western countries that would mean dropping agricultural subsidies that hamper free trade and loosening immigration restrictions that hamper free movement. Those moves, however, are basically too good to be true. People profit from those economic distortions, they are part of the voter base that nation states need to survive, and thus the developing world will continue to get more aid than development, at least for a while.
[...] discusses the importance of development assistance rather than aid as a system for lifting Sri Lankan [...]
Didn’t I say Indi was talking about politics all along? I thought it was about Mahinda Chinthana. No, it’s about setting up a World Federation and installing a Supreme Commander.
This reminds me about a typist (yes we had typists) at the place I worked at before, who once quietly asked me what Mahinda Chinthana was all about. She was actually under the impression that Chinthana was Mahinda’s middle name. You can imagine what her typing was like, though she was otherwise a really nice person.
Here is a talk I gave recently on migration and development for anyone who is interested.
Migration and Wealth of Nations
Economic Freedom Networks Asia; 11th Annual Conference, Jakarta, Indonesia
6-8 October 2010
Migration and Governmental Development Plans: The Case of Sri Lanka
Harsha de Silva, Ph.D., Member of Parliament, Sri Lanka
? Distinguished members of the head table, ladies and gentlemen: It is indeed a pleasure to be here in Jakarta for this important conference and I thank Friedrich Naumann Foundation for inviting me.
? At the outset, I wish to establish that while I represent the opposition in the Sri Lanka Parliament, what I plan to speak on has no political bias; the points are based on my economics and public policy background.
? In the short time allocated to me I wish to touch on a few important issues on the topic given to me: “Migration in Governmental Development Plans” as relevant to Sri Lanka.
? Sri Lanka is currently facing a multifaceted migration issue. Some common to other countries while one not so common:
o Internal migration issues; here we face two challenges.
? One; the common process of rural folk moving to cities in search of better economic prospects. Even though the expected outcome; based on the income and the probability of getting employment that will ensure such income, does not materialize for many and they end up in quite bad living conditions, the flow of migration in to metropolitan areas like the capital Colombo is on the rise. This has created a serious problem of unauthorized and unhygienic urban dwellings in the city while creating a labour supply problem in the rural areas.
? Two; the not so common issue of internally displaced persons. From Muslims who were forced out of Tamil areas by the LTTE to the Tamils who lost their homes during the protracted war and other Tamils who had to leave their fertile land due to establishment of ‘high security zones’ by the government, we face an uphill task of dealing with IDPs.
o External migration issues; here again we face two issues. One a current issue and the other that will come upon us in the next several years if Sri Lanka continues to grow at the expected rates.
? The current external migration issue is primarily two-fold. One, the economic impact and the other the social impact.
? The literature talks about ‘push and pull factors’ in external migration. Here, what I believe is most relevant in the case of Sri Lanka are economic factors, followed by political factors.
o From the push or ‘supply’ side, the lack of economic opportunity is the primary cause pushing men and women to look for employment opportunities overseas. It is estimated that close to 1.8 million Sri Lankans are employed overseas; mainly in ME, EU and Southeast Asia.
? According to the Foreign Employment Bureau some 667 Sri Lankans leave for overseas jobs everyday or quarter of a million on an annual basis. True, most also return in a few years, but the net out-migration is positive; and that is why the 1.8 million-stock is increasing.
? According to the same source, the bitter truth is that 67% of all leaving for such jobs for last year, which is similar in the previous years, were either going for unskilled jobs or as housemaids. Among men this percentage was 41% but among women it was an alarming 93%.
? Even with low monthly salaries the vast numbers of migrants still make remittances Sri Lanka’s top foreign exchange earner. Last year’s official remittances totaled some USD 3.3 billion while it is estimated that with unofficial remittances this figure may have been close to USD 5 billion.
o The other major push factor in the current external migration issue is political. It is estimated that the 30 year war forced close to a million, by far the vast majority being Tamils, to migrate out of Sri Lanka. Of this number it is estimated that some 250 to 300,000 live in Canada; 200,000 in the UK; 100,000 in France; 60,000 in Germany; 70,000 in Australia; 25,000 in the US and so on.
? The Diaspora community with large numbers of professional and skilled persons has over the years built a very strong financial reserve that has thus far not become available in any significant manner.
o The future issue that I alluded to earlier is a possible reversal of the current situation. If Sri Lanka continues to grow at the double digit rates envisaged by the Government it is inevitable that the labour force will not suffice. Even at the moment unemployment in Sri Lanka, albeit the methodological issues, is under 6 percent. With a natural rate of unemployment, say of 3-4%, the day that Sri Lanka will need to import labour may not be that far away. In fact, even today issues are cropping up in many parts of the island with regard to Chinese workers on infrastructure projects and Indian workers in agriculture, fishing and numerous other areas.
? Now I want to turn to the development plans with regard to migration in the context of the issues that I elaborated.
? The first main point is the perennial rural to urban migration; in the case of Greater Colombo, more than 650,000 of perhaps 1.5 million were born outside Colombo. The standard answer to the problem is to provide economic opportunity in rural areas of the country: move resources to rural areas and create employment opportunities. This is what is referred to as spatial targeting. But, after 60 years of attempts while the Greater Colombo and a few other metropolitan areas have developed rural areas continue to falter. Is this a policy failure or is it how development takes place?
o The World Bank’s World Development Report of 2009 takes an interesting evidence based approach. It makes two points. One; that growth will be unbalanced and trying to spread out economic production amounts to fighting the forces of economic growth. Two; that persistent spatial disparities are neither desirable nor inevitable. Thus it argues that the answer to the question of unbalanced growth and inclusive development lies in changing the debate from spatial targeting to spatial integration.
o Expanding on the WDR work, the 2010 World Bank publication “Sri Lanka: Connecting People to Prosperity”, recommends that spatially blind policies such as progressive income tax policies, minimum national health and education standards and removing restrictions on labour mobility will have the spatially sharpest effects in Sri Lanka. Changes to existing land use policies would be another crucial spatially blind intervention that I would think will give the Sri Lankan farmer the freedom on crop diversification particularly in paddy land. Lack of ownership of paddy land given to farmers since 1935 has severely restricted the economic freedom of small farmers and has left them with no option but to stay back in unproductive land or migrate to urban centres.
o Then, spatially connective policies such as transport and communications improvements that link lagging regions with leading regions are the next important. Spatially targeted interventions to stimulate economic development the report suggests should be the policy instruments of last resort except for the war ravaged areas in the Northern and Esatern provinces where particular incentives for agriculture should be provided.
o Therefore the Government needs to rethink its vastly expensive rural roads programs and other unproven spatial targeting programs and consider spatial integration policies in order to connect all Sri Lankans to prosperity.
o I am not necessarily endorsing the World Bank’s view; but alternative views such as these need to be considered in formulating migration related development plans.
? The second key point is the issue relating to the Internally Displaced Persons. While Sri Lanka had perhaps the largest IDP camp in the world; the much talked about Menik Farm camp that held some 160,000 of the estimated 280,000 IDPs in mid 2009 the situation has now improved. According to the Government the number of IDPs has dropped to just over 25,000 as at end last month. This number may not wholly accurate as it is estimated that at least 30,000 IDPs are in temporary locations; with friends and family without a place of their own; but it indicates direction.
o There are real problems with returning IDPs; one is that some areas are still occupied by the military or due to mines; and these mines must be cleared before resettlement takes place and the allegation is that de-mining is slow.
o But the more complex problem is that an estimated 65,000 Tamil people cannot return to their homes in the Jaffna area in the North as their homes now fall inside what is called a ‘high security zone’ where civilians are no longer allowed. Added to that is the allegation that thousands of Tamil people are being prevented from returning to their homes in the Vanni area because the military is planning to acquire land to build cantonments.
o The allegation that Sinhalese families might be resettled in the original Tamil areas is also very much alive. Suresh Premachandra, a TNA colleague of mine in Parliament recently stated that the Government could settle 100,000 (Sinhalese) military families in the Vanni area in the North which would mean 400,000 persons that will change the demography of the area overnight.
o Therefore the Government must ensure their development plans in the former war ravaged areas of the North and East where the IDPs originate from are free from ‘horizontal inequalities’ as very convincingly argued by Frances Stewart in another context.
o The involuntary internal migrants must be provided the opportunity to return to their homes and have the freedoms that they once enjoyed.
? Beyond resettlement the problems faced by the IDPs reintegrating in society and restarting their lives are yet to be systematically addressed. Here, significant attention needs to be paid to skills development, improving market access and making available financial resources for economic revival.
? Next, I wish to touch on the external migration issue in the economic context; be it to the Middle East, Europe or Southeast Asia.
o If the ‘push’ factors are improved; essentially by creating better economic opportunity, then the need for migrating to the Middle East etc. will naturally fall. Prof. Sirimal Abeyratne, a participant of this conference, has continued to argue that increasing migrants indicate increasing difficulty to live in Sri Lanka and that the successive Governments should not attempt to paint a positive picture on remittances but accept failure at home.
o Creating better economic opportunities for all Sri Lankans is of course the objective of all Governments and given the golden opportunity that Sri Lanka got after the end of the war it is up to this Government to seize it. Unfortunately the movement in this regard is slow; in fact foreign direct investments for the first 6 months of this year, in peace time, has fallen by some 17% from the same period last year, during the war.
o Having said that, remittances remain the most sustained and growing component of external inflows. In 2009, at USD 3.3 b it surpassed the earnings of thus far the highest export earner apparels, which, in reality brings in a lot less foreign exchange in net terms after deducting imports.
o In 2009, remittances were sufficient to wipe out the entire trade deficit and were 5 and a 1/2 times the total FDIs.
o Thus far, for the first 7 months of 2010, remittances have increased 12.5% to USD 2.1b but given the trade balance has zoomed by 125% over the same period last year remittances are not going to be sufficient to cover the trade balance due to slow down in exports and increasing imports.
o The slow down in exports is taking place with the removal of trade concessions by the European Union due to Governance issues and also because of government policy of appreciating the currency to reduce its debt burden which is resulting in our exporters being priced out of the market.
o In this background remittances become even more important for the Government, and thus, through its multiple agencies to promote employment for Sri Lankans overseas, is working to increase the number of migrants and remittances. The Mahinda Chintana Idiri Dekma; the 10 year development plan of the Government identifies three areas to achieve this:
? Obtain 50,000 new jobs in Korea, Libya and Japan between 2010-2013
? Move jobs from unskilled to skilled professions
? Create a ‘Foreign Employee’s Provident Fund’ for all migrant workers
o Whether any of these would be achieved or not, the direction of the State with respect to external migration is clear.
o The evidence is clear that if it were possible to shift migrants from the typical housemaid and unskilled worker category in the Middle East to better skilled employment, particularly in Europe, the dividends would be considerable.
? ‘SEEDS’, a local NGO working with the Joint EU-UN Migration and Development Initiative has estimated that there is a vast difference between the remittances between the two groups. As opposed to about USD 3,000 annual remittance per ME migrant, using both formal and informal sources, migrants in Europe remit close to USD 10,000 annually.
o Another very important area attention is required is the training and capacity building of the returning migrant to utilize his or her saving towards a productive purpose; be it starting some entrepreneurial venture of using the acquired or enhanced skills to obtain better employment. It is unfortunate that many a time, the hard earned savings of many years, is used up for consumption purposes while the returnee engages in no profitable activity.
o However, it must be noted that the negative economic impact of migration of where one of the parents leaving the home is quite significant from a social context; particularly in terms of brining up children and the cost of child abuse.
? Finally, I want to touch on the political factors that have pushed out over a million Sri Lankans; mainly Tamils out of Sri Lanka as mentioned earlier.
? I do not have the time to go in to a comprehensive discussion on what the Government needs to do to create a peaceful and inclusive environment in Sri Lanka for who ever wishes to return to do so.
o But I will say that promoting freedom, and not restricting freedom, is at the top of the list. The direction in which Sri Lanka is moving post the military victory of the Tamil terrorists is clearly not the path to winning the peace with the Tamil population.
o Equally important is the creation of an inclusive society by bringing all ethnic groups together in the development process. The key here is devolution of power; based on the 13th Amendment to the Constitution. But the Government has for all intents and purposes relegated the discussion on devolution of power to the backburner.
? While I sincerely hope that the Government will do what it takes to facilitate the return of every single involuntary migrant, there are number of other measures required to encourage the Diaspora to make investments for development.
o While countries such as Israel and India with large Diaspora communities have done extremely well in attracting Diaspora money for investments; for instance Israel around USD 1b annually, the lack of interest in the 2009 Sri Lanka Diaspora Bond to raise USD 500 million which ended up as an absolute flop must be taken in to consideration in developing plans to attract investments from wealthy Sri Lankan migrants. Understanding why the bond issue failed and creating the right conditions for flow of such investments is important.
o Besides such bonds and other debt instruments, how the Indian Government has managed to get NRIs, or non-resident Indians, to participate in the development process of India; both in terms of equity finance as well as linking up with their networks and know-how must be studied and emulated.
o In fact, while there have been moves to get the Tamil Diaspora to bring in significant amounts for investments in to the reconstruction of the former conflict areas, it is not happening.
o Dr Muttukrishna Sarvananthan, one of Sri Lanka’s top experts on the economics in the former conflict areas, who is here at the conference, I am sure, could add much more to this discussion later.
? In conclusion, I wish to summarize the issues related to migration in governmental development plans for Sri Lanka.
o One is the twin internal migration issues: rural-urban migration and internally displaced persons. Here I elaborated on the need to consider spatial integration policies for the management of movement of people to the already overcrowded cities and the need to create the right environment for the IDPs to return to their original homes.
o Two is the economic and political issues that push people out of Sri Lanka. Here again I touched upon the need to reduce the push force by providing greater economic opportunities and establishing an inclusive society.
? I do realize that these are easier said than done. Therefore, while attempts are being made to meet these goals, the Government must take steps to start mainstreaming migration in the development process; in that migration implications should become part of any and all development strategies. This way migration will become a component of a holistic development plan.
? Contributions of migration in a mainstreamed development process will then be multifaceted. (International Organization for Migration) with at least:
o Economic contribution
? Remittances, investments and entrepreneurship
o Intellectual contribution
? Technology, innovation and skills transfer
o Political contribution
? Promotion of democratic reform and human rights
o Philanthropic contribution
? Charitable donations to communities for health and education etc.
o Social and cultural contribution
? Social networks, cultural exchange, supporting new and potential migrants etc.
? Finally, once migration returns to more ‘normal’ levels where no one is involuntarily relocated, these mainstreamed strategies can play an important role in Sri Lanka’s development. And these are generalizable to other countries as well.
? Thank you for your attention.
Dear Dr. Harsha de Silva,
I inform you that I find this speech of yours, which you made in one of the largest and important cities in the world, to be absolutely brilliant, thoughtful, insightful, and magnificent. I feel sorry for myself for not being able to be there and hear the speech in your own beautiful voice, when you talk about the all important issue of migration, and witness how intelligent, articulate, and graceful you are, for you are without doubt the only parliamentarian in Sri Lanka who has the brains, bravery, looks, courage and vision to usher the island nation to the second decade of the 21st century – the century of knowledge, information, and right-wing politics. I hope, not only from the bottom of my heart, but from the inside of my brain and the inside of my gut, that you’ll continue to make such similar, superb speeches, not only in important cities like Jakarta, but also in the now-gone-to-dogs-who-bitches-about-everything Sri Lankan parliament, and post those lengthy, yet absolutely rewarding and fascinating speeches on indi.ca, which is haunted by lonely internet ghost like myself, who has nothing to do but read the writings of people such as you, and worry about the shortness of my penis.
I remain, Dear Sir,
Yours Faithfully,
Thomas Lefroy.
indi, you talk as if providing development aid and taking away US agriculture subsidies are mutually exclusive.
The only only way rich countries will eschew protectionist trade policies and allow free movement of labour will be in a world federation dream. Otherwise they wouldn’t burn their crops to maintain price levels and process food for fuel when so many in the world are starving.
I’m puzzled about the World Bank views on paddy land. I didn’t think barren land was the reason for low yeilds. I thought it was unsound agricultural practices and poor management of rice stocks that made paddy cultivation unprofitable, and that this was something that could be corrected easily. Wouldn’t it threaten our food security if crop diversification was allowed in paddy land when we can’t grow any other staple? I think it’s a little too soon to do that.
I didn’t realise so much land in Jaffna was still designated high security zones, which is really very unfair when there is no serious security threat anymore, though I don’t see anything wrong in the government setting up military camps or settling people, regardless of their ethnicity, as long as it was in previously unoccupied state land.
Sinhalese protect child rapist Christian priest:
“Two were injured in a clash that erupted between detainees in the Vavuniyaa remand prison Tuesday around 5:30 p.m. when Tamil detainees assaulted a Mannaar-based Christian priest and a long-time humanitarian worker, who was recently held in remand over alleged charges that he had sexually abused Tamil girls displaced due to the Vanni war.
Altercation ensued as a group of Sinhala detainees rushed in defense of the priest and started assaulting their Tamil detainees with pointed weapons and blades.
The alleged sexual abuse of under-aged girls are said to have taken in a Home for Destitutes run by the priest at Murungkan in Mannaar district, legal sources in Mannaar said. ”
http://tamilnet.com/art.html?catid=13&artid=33297
@5452
I totally agree with you. The sinhalese should have let the Tamils to rip the christian priest’s clothes off, sexually abuse him (oral and anal), crush his testicles, cut off his penis and feed it to him, and pierce his belly button. Totally agree man.
http://www.godisimaginary.com
Cheating Clergymen in Sri Lanka
Christian priests who are falsely claiming to have converted to Islam have been on a campaign to ‘promote’ Islam and collect funds under the cover of Islam.
However these people were seized and this unlawful and unethical campaign has come to light due to action taken by the Forum for Religious and Cultural Studies (FRCS) and Islamic Call and Research Academy (ICRA)?organizations.
In one such instance, a Catholic priest who had ‘converted’ to Islam led a bogus campaign to collect funds from Muslim brothersand sisters in the name of Islam under several different names: Issa, Farook, Razzak, Abdul Raheem, Salman Timothy. Furthermore he had also cheated many Muslims by taking their money and?promising to send them to Italy. ???
http://www.lankaweb.com/news/items/2011/01/03/cheating-clergymen-in-sri-lanka/
What’s the point? Both christianity and islam are stupid religions, just like all other religions. What do you expect from people who promise eternal salvation?
It’s funny. In this blog, everything, from porn to particle physics, ends in religion.
[...] this author, Michael A. Clemens, states what I have said in the past, that allowing immigration and free trade can do more to help poor countries than any form of direct aid. Seriously, poor people don’t [...]