1. Diaspora & Economy: Effects of the Economic
Slowdown on Remittances
Muhammad Sohaib
BBRM-10
Sustainable Development Policy Institute
1

2. Outline
• Introduction
• Global Economic Slowdown
• Patterns and Trends in Migration
• Contributions of Diaspora
• Remittances Flow to Developing Countries
• Remittances to Pakistan
• Some Case Studies
• GoP Initiatives
• Future Outlook
• Overseas Pakistanis: Manifestos of Political Parties 2013

3. Introduction
• Diaspora
• Pakistani Diaspora
• Types of Diaspora
Labor Diaspora
Brain Drain
Immigrants
• Destinations of Migrants

4. Global Economic Slowdown
• Global Financial Crisis 2007
• Global Economy Contracted in 2008-2009
• Downturn directly hit the advanced economies
• In 2009 GDP per capita turned down in 60 out of 107
developing economies (UN 2010)
Source: UN Global Economic Outlook 2012

5. Patterns and Trends in Migration
There are few jumps and down falls, but there is a big climb started in 2005
0
50000
100000
150000
200000
250000
300000
350000
400000
450000
500000
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Total Migrants

6. Type Wise Migrants
2000 - 2012
Decline in unskilled migrants
0
50000
100000
150000
200000
250000 2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Highly Qualified
Highly Skilled
Skilled
Semi Skilled
Un-Skilled

7. Pakistani Workers Registered for Overseas Employment
2002-2012
Migrant flow to: UAE drops in 2008, Saudi Arabia 2009 and diminishes in Oman in 2009
Data Source: BEOE
0
50000
100000
150000
200000
250000
300000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Saudi Arabia
UAE
Oman

8. Pakistani Workers Registered for Overseas Employment
2002-2012
Decline observed in the case of Khyber Pakhtunkhwa and Punjab
0
50000
100000
150000
200000
250000
300000
Punjab
Sindh
K.Pakhtunkhwa
Balochistan
Azad Kashmir
N.Area
Tribal Area

9. Contributions of Diasporas
Diasporas contributed in three facets
• Remittances
• Brain Drain
(Brain Drain is a talent mobility; which can bring benefits to both host and home countries)
- South Asian Brain Dain
- Silicon valley of India (Bangalore)
• Role as Intermediaries
-Diasporas can connect home countries to foreign investors
- Cultural interpreters

10. Remittances to Developing Countries
Remittances have shown resilience than FDI since the
global financial crisis
Developing countries received $ 401 billion remittances
in 2012(World Bank)
In history it can be observe that remittance remained
stable
(Mexican financial crisis 1995, Asian Market Crisis 1997)

11. Remittances to Developing Countries
The remittance flows to developing countries in 2006 were 235 $billion and it increased in 2007
with a growth rate of 22.9 percent to 289 $billion, and increased to 338 $billion in 2008 with a
growth rate of 16.9 percent

12. Top 10 Recipients of Remittances in 2012
69
60
24 23
21 21
14 14
10
7
0
10
20
30
40
50
60
70
80
India China Philipines Mexico Nigeria Egypt Banladesh Pakistan Vietnam Lebnan
$USBillion
Three South Asian countries are in top 10 recipients
Source: World Bank, Migration and Remittance Brief 20

13. Workers’ Remittances to Pakistan
2002-2011
Was there no impact of Global Financial Crisis on Remittances?
Data Source: State Bank of Pakistan
0
2,000
4,000
6,000
8,000
10,000
12,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
US$Million

14. Some Case Studies
Barajas et al (2010) investigated the effect of economic
slow down on worker’s remittances of Africa
(Many countries were forecast to lose 0.1 to 0.2 percent GDP growth due to fall in
remittances in 2009)
Ratha. D and Mahapatra. S argued that the global
financial crisis has caused decline in remittance flows to
low income economies
Balan et al (2011) evaluated the remittances and
migration flows during the financial crisis in the
European Countries

15. Some Case Studies
Raihan .S (2010) examined the impact of global
financial crisis on remittances, exports and poverty in
Bangladesh.
(He analyzed the negative shock in remittance will result decline in real GDP by 0.1
percent)
Raihan. S (2010) explored the impact of global financial
crisis on migration and remittances in Bangladesh.
(The macro statistics showed positive growth in remittances during the crisis but there
were large number of household who faced fall in remittance inflows by migrants)

16. Some Case Studies
Ahmed et al. (2010) examined the impact of
remittances on economy and household welfare
(If remittances inflows reduced to 50 percent, the GDP growth declined to 0.7% as a
result and investment and imports also decreased to 7.7 percent and 6.4 percent
respectively)
Ahmed and Sugiyarto (2012) find that improvement of
household consumption and investment are positively
and consumer prices are negatively associated with
remittances

17. GoP Initiatives
• BOEO is working under the emigration ordinance of
1979
• Overseas Employment Corporation (OEC)
• Overseas Pakistanis Foundation (OPF)
• Foreign Remittance Card Scheme
• Pakistan Remittance Initiative

18. Workers’ Remittances from Abroad
2002-2011
• Remittances not affected during and after the crisis
– Traditional migrant economies in Middle East remained
insulated (except UAE)
– Indian Diaspora in Middle East was a lesser competition
given the appreciation of Indian currency
– The weakening of Pakistani currency implied that
Diaspora’s consumer surplus increased when purchase was
made locally

19. Future Outlook
• Demand Side Factors
 The flow of remittances will continue to increase in the
foreseeable future
 Pakistani migrants have embarked upon non-traditional
workplace destinations as well
 East is a good Option
 The banking sector in Pakistan is now viewing the remittances
as a major source of business

20. Future Outlook
• Supply Side Factors
 EU will remain in recession
 North America will continue to Maintain its strict visa policies
 China and East Asia will be future engines for Economic
Growth
 Middle East will continue to diversify away from South Asian
Migrants

21. Recommendations
• Diaspora may be engaged beyond their monetary
contributions : in terms of knowledge and technology
• Migration Policy needs to be aligned with the Development
Policy
• Banking Sector can play a vital role
• Role of Overseas Pakistanis Division needs to be revisited

22. Overseas Pakistanis: Political Parties
Manifestos 2013
• Pakistan Muslim League – N
• Pakistan Tehreek-i-Insaf
• Pakistan Peoples Party
• Pakistan Muslim League - Q
• Muttahida Qauami Movement

23. sohaib@sdpi.org
23
Thank You