Impact of Globalization on Poverty in Bangladesh: A Comparative Analysis of Skilled and Unskilled Labour Migration.
Overview of Globalization, International labour Migration, Skilled and Unskilled Labour Migration, Remittances and Poverty in Bangladesh
This chapter deals with an overview of globalization, International Labour Migration, Skilled and Unskilled Labour Migration, Remittances and Poverty in Bangladesh. It started with the globalization focusing on economic issues. The chapter deals with International labour migration and remittances. It is important to note that, skilled and unskilled labour migrations are important factor of recent labour migration discussion. Trend of skilled and unskilled labour migrations are discussed in this chapter. This chapter deals with also trend, development and pattern of poverty in Bangladesh.
Globalization is a multi-dimensional process that involves inter-linked economic, cultural and social change (Held et al. 2000). There is universal agreement that contemporary globalization is uniquely shaped by modern high-speed communications technologies(satellite phone links, the spread of cellular phones, digitalized data transfer, video conferencing, live international news coverage, etc.), fast airplane travel for passengers, and low-cost, high volume international freight (containerized transport, etc.) to speed the flow of trade goods. It is also understood that these technologies lead to a compression of time and space (Castells 1985, 1986).
We are about to enter the third phase of globalization. In the first phase, goods moved globally. In the second stage – capital- and now it is the turn of skilled labour. Very recently, a new trend has been emerging. A global pool of skilled human resources has emerged and employers in countries at different stages of development are all trying to draw from this global pool. During the recent past there has been a significant rise in work-related temporary migration from one country to another along with export of services.1
The impact of globalization of the world economy is becoming increasingly all- pervasive. Its positive impact is no longer confined to the developed countries. Even a developing country like Bangladesh, with its weak economy, is looking at globalization to strengthen its base. In the last decade cross border movement people across nations, especially the movement of skilled and the unskilled labour from developing to developed countries has resulted in significant increases in the incomes of the former through remittances of foreign exchanges by their overseas citizens. This phenomenon has given a boost to the economies of the developing nations. Bangladesh has an edge over many other developing countries in its abundance of human resources. This has resulted in its emergence as a key global player as a source country for the supply of manpower to the developed nations (Ray, Sougata and Others, 2008:1)
International Labour Migration, Skilled and Unskilled Labour Migration and Remittances in Bangladesh
Manpower is one of the major national resources of Bangladesh. About 35 million people constitute this vast reservoir of manpower. However, inadequate education and insufficient capacity of the local industry is responsible for a large section of the population remaining unemployed. At the current level of development it is not possible for Bangladesh to absorb the full range of available unskilled, semi-skilled and professional manpower within the country in an appropriate manner and hence the need to find employment opportunities for them abroad. The absence of a vibrant domestic labour market creates huge demand for overseas employment among the young labour force. Starting in 1976, over the years, Bangladesh has emerged as a notable exporter of manpower and a steady source of human resources to a number of foreign countries who need to import manpower from other countries.
For a developing country like Bangladesh, migration and remittances have been growing rapidly and consistently in the recent years. It is interestingly to note that as income rise in a country its population increasingly sees employment generation as the returns to investment in human capital development. In the high-income countries there is preference for the high skilled and more rewarding jobs over the skilled and tedious jobs. Moreover high incomes sustained over a long period have led to a marked demographic change in the countries. The population growth rates have fallen and the current population is ageing very fast. This has given rise to two distinct and interrelated situations in the unskilled service sector, labour market (say demand for a janitor) and in the skilled service sector labour market (e.g. nurshing jobs).The first implication is that there is serious shortage of local workers who are ready to except such jobs and the second, the demand for such jobs is likely to grow in the future as the demographic changes become more pronounced. Interestingly even in the high skilled and professional job categories the global demand is higher than the supply. This mismatch is likely to become more acute in the coming years especially in the areas of health care, education and IT. Hence, broadly, the job opportunities are in three segments- high skill knowledge intensive jobs, low or unskilled jobs and finally in the selected services were some specific skills are necessary, such as in nurshing or in providing paramedical support.
Migration in a Historical perspective
Migration is very old phenomenon. From the very beginning of human civilization people migrated for food and security. Now people migrated for economic opportunity and income security. The history of migration from Bangladesh is not more than one and half century. During British ruling some people migrated for short-term to Britain and also America for trade and higher study. But the flow of migration from Bangladesh increased after the mid-twentieth centaury. But after independence of Bangladesh in 1971, the flow of migration to other countries also increased. During mid 1970 due to oil exploration of Middle East of both short-term and long-term migration increased (Hasan, R.A. 2006:4).Gradually, such migration also expanded to the newly industrialized countries of Southeast Asia. The foremost character of this type of migration is its short duration. This migration takes place on the basis of specific job market (Siddiqui, T. 2003:14).
Nature of Migrant and Scale of Migration:
Every year over 300000 Bangladeshis go abroad for jobs and this number has been growing rapidly. The Bangladeshis working abroad currently range from domestic aides to atomic scientists. A large section of them are un-skilled and semi-skilled workers. Over several decades many Bangladeshis migrated permanently to the developed countries for better living. Their most preferred destinations were Western Europe, North America, Australia and New Zealand. However, they are also located in almost all the federating states of the former Soviet Union and eastern European states of Bulgaria, Hungary, Czech and Slovak republics, Romania and Poland. There is a relative small presence of Bangladeshis in Africa and Latin America (Ray, Sougata and Others, 2008:9).
Systematic recording of migration of Bangladeshi workers started from 1976. The Bureau of Manpower, Employment and Training (BMET), which is under the Labour and Employment Ministry of the Government of Bangladesh, is in charge of keeping the record of Bangladeshis who have left the country for overseas employment. BMET has classified temporary migrant population into four categories: professional, skilled, semi skilled and unskilled. Doctors, engineers, teachers and nurses are considered professionals, manufacturing or garments workers, driver, computer operator and electrician are considered skilled, while tailors and masons etc. are considered semi skilled. Housemaids, cleaners and menial labourers are considered unskilled workers. Table – 1 shows that the skill composition of those who migrated over this period. From 1976 to 2007 half of the total migrants were unskilled (Bangladesh Economic Review, 2008). In 1995 professionals skilled and semi-skilled workers were 52.42 percent of total migrants. But in 2007 it decreased in 42 percent. The composition of worker going abroad for 2007 was: professional 0.08 percent, skilled worker 19.86 percent, semi-skilled 22.07 percent and low skilled 57.99 percent.
Table – 1
Year Wise Official Flow of Bangladeshi Workers by
Their Skill Composition (1995-2007)
Source: Bureau of Manpower, Employment & Training. (No information available in 2008)
The formal “export of manpower” was launched in 1976 with the number at 6,087 workers only. In 2007 the export went up to 832609. Form 1976 to April 2008 altogether 56.86 lack people have migrated from Bangladesh on overseas employment (Bangladesh Economic Review, 2008:30). Table-2 shows the migration by country of employment. Bangladesh exports contract labour mostly to Middle Eastern and Southeast Asian Countries. Saudi Arabia, UAE, Kuwait, Oman, Malaysia and Singapore are some of the major countries of destination. Saudi Arabia is the largest employer of Bangladesh migrant workers. Bahrain, Qatar, Jordan, South Korea, Brunei, Mauritius, Italy, UK, USA, Spain, Japan, France, Australia, Canada are also preferred countries for migration.
Table – 2
Migration by Country of Employment
|2008(up to April)||64778||4||130727||7058||16578||36556||17684||21770||295155|
Source: Bureau of Manpower, Employment & Training.
It is well known that overall migration rate do not convey the full picture of the possible impact of migration and structure of migration is critical. The first element of the structure is the composition of migrants by their skill or the level of education.
Emigration rates by educational attainment and country of birth in 2000 for SAARC countries: Migrants as % of all educated (Natives plus migrants) in each category
|Country||Primary educated||Secondary educated||Tertiary educated|
Source: Docquier and Marfouk (2004)
The table shows that tertiary educated Bangladeshi living abroad equal 4.7% of all tertiary educated Bangladeshi in the country and abroad. This rate is not too high when compared to other SAARC countries like Pakistan (9.2%) and Sri Lanka (27.5%).
2.4 Flow of Remittance
People usually migrate internationally to change their destiny. This international migration transforms not only the destiny of individual migrants but also the conditions of their families living their own country. Remittances have become the most powerful means to maintain relationship with migrants with their societies of origin.
The emergence of remittances as a new strategy for poverty alleviation in developing countries has spurred multilateral institutions, international organizations, foundations, universities and national governments, including the Asian Development Bank(ADB), Inter-American Development Bank(IADB), International Monetary Fund(IMF), World Bank, and the United nations among others to seriously study, identify and implement measures on how this inflows could be maximized and then harnessed for the development of the migrants countries of origin. There are three major positive effects of migration. Expatriates who remain abroad contribute money via worker remittances, Returning migrants, in particular, bring back their skills and work experience from abroad, thus boosting productivity of the local economy. Migrants may also invest capital in entrepreneurial ventures that facilitate transfer of knowledge or technology to the developing countries and boost productivity and economic development. While all three are equally important for the development of Bangladesh (Ray, Sougata and Others, 2008:5)
The Bangladesh Bank documents remittance flows to Bangladesh from all over the world. Table-4 shows that the remittances sent by migrant workers have grown over time. It has increase from US $ 1217.06 million (1995-96) to US $ 5649.23 million (2007-08, March). In 2005-06 April remittances increased 21.91 percent compare to the figure for 2004-05. In 2004-05 remittances earnings were equivalent to 6.37 percent of GDP. This ratio has a secular increasing trend over the year. The ratio of remittances to export earning is also increasing steadily and in 2004-05 it was 44.46 percent (Table-5).
In 2004-05, 39.25% of total remittances came form Saudi Arabia. Second largest remittance sending country was US, 14.48%. UAE and Kuwait were third and fourth, 11.49% and 10.57% respectively.
Table – 4
Country Wise Flow of Remittances
Million US $
|Financial Year||Saudi Arabia||UAE||Qatar||Oman||Bahrain||Kuwait||USA||UK||Malaysia||Singapore||Others||Total|
|2007-o8 (upto March)||1641.55||793.86||209.40||172.89||90.61||623.84||962.40||696.61||46.45||94.00||317.62||5649.23|
Source: Bangladesh Bank.
2.3.2Macro Economy and Remittances in Bangladesh
Table – 5
Ratio of Remittances to GDP and Export Earnings
|Financial Year||Percent of GDP||Percent Export Earning|
Source: BBS, EPB, Bangladesh Bank.
Remittances and Global Economy
2.5 Poverty in Bangladesh-Measures, Development and Patterns
2.5.1 Defining and measuring poverty
“Poverty has manifold expressions and indeed many roots. It is about income deprivation. It is about shortfalls in consumption and inadequate supply of nutrition. It is about poor access to education and low physical asset bases. It is about risks, uncertainties and vulnerabilities. It is about personal insecurity as much as it is about lack of food security. It is about crisis coping capacities. It is about self-development initiatives. It is about dismal state of health and health care access (Sen. and Rahman 1998)”.
2. 5. 2. Income and Human Poverty
Poverty can be defined between income poverty and human poverty (Income and non-income-Nelson). Income poverty is the classical definition, in which a certain level of income or consumption is set and the people below this limit are considered poor. This is the easiest way to define and estimate poverty. However, poverty does not need to be money based. A person can also be poor in the sense of lack of opportunities and capabilities, such as education, health care and gender discrimination. In order to get a completely accurate estimation, the perception of each individual’s own situation must be considered, but this would make it impossible to measure poverty. Therefore, income poverty is often preferred as measure of poverty (Maxwell, 1999).
Absolute and Relative Poverty:
The definition of poverty is also needs a distinction between absolute poverty and relative poverty. The relative definition of poverty establishes a poverty line as a fixed proportion of an income standard in the population, for example the mean or median income. The relative poverty measurement is useful when measuring inequality within a country, but does not show how the standard for the poor has developed; it may show rising poverty even though the standard of living of the poor has actually increased. Absolute poverty is more frequently used. It refers to a fixed poverty line where purchasing power is determined so that it covers basic needs (Bourguignon, 2004).
2.5.3. Poverty measure
Measurement of poverty in countries is generally based on national poverty lines. A poverty line is derived by the purchasing power parity (PPP) estimation of an income level, below which people are considered poor. However, because of the problems with different methods for estimating uniform poverty liens across countries, multilateral organizations such as the World Bank, often make their own estimations using a 1 US $ a day poverty line for estimating poverty.
To measure income poverty we can use Headcount Index, Poverty Gap Index and the Squared Poverty Gap Index. These measurements are frequently used in the literature and show different aspects of poverty.
The Headcount Index (H), given by the percentage of the population living in households with consumption per capita that is less than the poverty line. This can be interpreted as a measure of the “incidence” of poverty. The measure has the advantage that it is easy to interpret, but it tells us nothing about the depth or severity of poverty.
The Poverty gap index (PG), defined by the mean distance below the poverty line (where the mean is formed over the entire population, counting the non poor as having zero poverty gap), One can interpret this as a measure of poverty” depth”. Its disadvantage is that it is unaffected by changes in inequality among the poor.
The squared poverty gap index (SGP), of James Foster, J. Greer and Erik Thorbecke, defined as the mean of the squared proportionate poverty gaps (again the mean is formed over the entire population, counting the nonpoor as having zero poverty gaps). Thus the poverty gaps are weighted in aggregation, with greater weight given to larger gaps, and where the weights are simply the poverty gaps themselves. This simple change to the conventional poverty-gap index allows the index to reflect changes in the “severity” of poverty, in that it will be sensitive to inequality among the poor.
All three measures can be derived from the following formula:
P(?)= 1/n?(z-yi/z) ?
Where, z is the poverty line, Yi is the income of the poor below poverty line, n is the total population, and ? represents the distribution-weight. ?=0 yields head-count index, ?=1 poverty gap index, ?=2 distributionally sensitive squared poverty gap index.
In the Bangladesh context, the poverty line corresponds to 2122 calories per person per day. There are several methods for setting the poverty line. Of these, the approach which is based on costing of a given food bundle (corresponding to 2122 calories per person per day)…the so called fixed bundle approach …is found to be better than other methods such as Food-Energy Intake (FFI).
Human-Poverty calculation is measured by Human Poverty Index (HPI). HPI is composed of three indicators (one of which is a composite of three sub-indicators) capturing three types of deprivations: deprivation in health, deprivation in knowledge, and deprivation in overall economic provisioning. These dimensions are given equal weights in the construction of HPI. The specific description of each of these dimensions is given below.
Deprivation in health is indicated by vulnerability to death at a relatively early age as quantified in the percentage of people expected to die before the age of 40 years. is indicated by vulnerability to death at relatively early age as quantified in the percentage of people expected to die before the age of 40 years.
Deprivation in knowledge is captured by the percentage of adults who are illiterate.
Deprivation in overall economic provisioning is quantified in three variables, namely,(a) percentage people without access to safe drinking water,(b) Percentage of people without access to health services, and (c) percentage of children under 5 who are moderately and severely underweight(Sen Binayak, 2000).
The problems with the Headcount Index are that it does not consider how far from the poverty line the poor are situated. The implications are that although improvement in income poverty may have occurred it does not show in the Headcount Index if they have not climbed above the poverty line. The Poverty Gap, on the other hand, measures how much money needs to be transferred to the poor in order for them to meet the poverty line, and thereby also measures the depth of poverty (World Bank, 2005).
Household Expenditure Survey (HES) was carried out first in Bangladesh in FY 1973-74. In subsequent years a number of HESs were undertaken; the latest one was conducted by BBS 2005. HESs carried out up to FY 1991-92 were based on Food energy Intake (FEI) and Direct Calorie Intake(DCI) methods in order to measure the incidence of income poverty. FEI method computes poverty lines by finding the value of per capita consumption at which a household can be expected to fulfill its calorie requirement. The direct Calorie Intake (DCI) method is traditionally used by the Bangladesh Bureau of Statistics for determining the poverty line. According to this method poor are categorized as “absolute poor” and “hardcore poor” based on their daily calorie intake. The poor who take 2122 k. cal per day per person fall below Poverty line-1 (and are known as the absolute poor) whereas the poor who take 1805 k. cal per day per person fall below Poverty line- 2 (these are termed the hardcore poor). In Household expenditure Survey (HES) conducted in FY1995-96, the BBS for the first time adopted the cost of Basic Needs (CBN) method for constructing poverty lines. Similarly, in the Household Income and Expenditure Surveys (HIES) of 2000 and 2005, CBN method was used. With this method, an absolute poverty line is defined as the value of consumption needed to satisfy minimum subsistence needs (food as well as non-food consumption) [Bangladesh Economic Review 2007:171].
2.5.4 Poverty Trend
Poverty is divided into two categories, such as (1) income poverty and (2) human poverty. The report of HIES-2005 reveals that at the national level, incidence of poverty registered a declining trend in 2005 as compared to 1991-92 based on CBN method. The incidence of poverty at the national level declined from 58.8 percent in 1991-92 to 40.0 percent in 2005 based on the upper poverty line (Table-1). During this period, the compound poverty reduction rate per year is recorded at 1.8%. But the rate of reduction in urban area (yearly compound rate 2.2 percent) is faster than that of the rural areas. On the other hand, during 2000 to 2005, income poverty also reduced from 48.9 percent to 40.0 percent and the compound reduction rate is 3.9 percent. This time is also reduction rate is faster in the urban area (yearly 4.2 percent) than that of the rural area (3.5percent).
Between 2000 and 2005, the depth) measured by poverty gap) and severity (measured by squared poverty gap) of poverty declined simultaneously both in urban and rural areas. It is notable that between 1991-92 to 2000, reduction rate of poverty was faster in the rural are than that of the urban area. The trends of poverty on the basis of Head Count Ratio and DCI method is presented in Table: 6.
Table: 6 Trends of Poverty based on Head Count Ratio and DCI Method
|Survey year||People below poverty line|
|Poverty line 1: Absolute Poverty, Daily less than 2122 kilocalorie food intake|
|Poverty line 2: Hardcore Poverty, Daily less than 1805 kilocalorie food intake|
Source: BBS, HIES-2005.
Table: 7 Trends of Poverty based on CBN Method
|2005(%)||2000(%)||Annual Change (%) (2000-2005)||1991-92(%)||Annual Change (%)
|Head Count Index|
|Squared Poverty Gap|
Source: BBS, HIES-2005.
According to Head Count Ratio using DCI method, in 2005, the incidence of absolute poverty were 40.4, 39.5 and 43.2 percent in national, rural and urban areas respectively. Under this method, a reduction of absolute poverty is recorded at 4.1 percent from 2000 and 2005; people living poverty line in 2000 were 55.8 million, which increased to 56 million in 2005. Through the number of poor people increased by 0.2 million during this period, it increased at a slower rate than that of the previous period.
According to Head Count Ratio, using DCI method, the incidence of hardcore poverty were 19.5, 17.9 and 24.4 percent in national, rural and urban areas respectively in 2005. Under this method a reduction of hardcore poverty is recorded 0.5 percent at the national level, 0.8 percent in the rural areas and 0.6 percent in the urban area. People living below hardcore poverty line in 2000 were 24.9 million, which increased to 27 million in 2005. Through the poor people increased during this period, it decreased as compared to 1991-92.
The percentage shares of income by deciles groups and Gini coefficient with rural and urban break-down for the surveys conducted during 2000 and 2005 are presented in Table: 8.
Table: -8 Percentage Distribution of Income Accruing to Households in Groups (Deciles) and Gini Co-Efficient
|Household Income Group||2005||2000|
|Income Gini co- Efficient||0.467||0.42||0.497||0.451||0.393||0.497|
Source: BBS, HIES-2005
It is evident form Table- 8 that income shares accruing to households belonging to decile 1 to decile – 5 were recorded at 2.00 percent, 3.26 percent, 4.10 percent, 5.00 percent and 5.96 percent respectively at the national level. All these declined with respect to 2000 survey findings, which were 2.41 percent, 3.76 percent, 4.57 percent, 5.22 percent and 6.10 percent respectively. These five deciles jointly share only 20.32 percent of total income, although they comprise 50 percent of the population. The percentage share of income of the lowest 5 percent household decreased from0.93 percent in 2000 to 0.77 percent in 2005. On the other hand, in 2005, the income share of households belonging to decile-6 to decile-9 increased but that of decile-10 decreased compared to that of 2000. The top 5 percent households were significantly losing their share of income and recorded at 26.93 in 2005, whereas the same was 28.34 percent in 2000. It may be mentioned that in the past surveys, the decile-10 including top 5 percent households sharply gained their share of income but in 2005, their shares declined. This may be attributed to gain by decile-6 to decile -9 in 2005.
2.5.6. Poverty Reduction
Although the intensity of poverty lessened in Bangladesh due to efforts made over the last three decades, its depth and severity still persists. Addressing this problem is a great challenge mainly due to resource constraint. Bangladesh has so far implemented five Five-Year Plans and one Two-Years Plan and a Three-Year PRSP Rolling Plan. The overarching goals of these plans were to accelerate economic growth and poverty reduction. As an outcome of these development activities, Bangladesh has made commendable progress in terms of reduction of income and human poverty. Bangladesh has received universal appreciation for attaining success in reduction of human poverty in education, health and nutrition. Bangladesh has already achieved three targets of Millennium Development Goals (MDGs) such as (1) removing gender disparity in primary and secondary education; (2) ensuring almost universal access to primary education; and (3) ensuring access to safe drinking water. For the last five consecutive years (2003-2007), Bangladesh attained the HDI rank of “Medium Human Development,” according to UNDP Human Development Reports. The recent report on Household Income and Expenditure Survey(HIES) 2005 published by the Bangladesh Bureau of Statistics (BBS) shows downward trend in income poverty. According to the Cost of Basic Needs (CBN) method used in the survey, the incidence of poverty at the national level declined from 48.9 percent in 2000 to 40.0 percent in 2005. By using lower poverty line, poverty declined to 25.1 percent in 2005 from 34.3 percent in 2000. According to direct calorie intake (DCI) method, poverty declined from 44.3 percent in 2000 to 40.4 percent in 2005. The incidence of hard-core poverty also showed a declining trend during the same period. Keeping the MDGs in vision, the government has approved the poverty Reduction Strategy Paper (PRSP). To address the challenge the poverty reduction, the government has adopted a fundamental strategy of seeking collaboration from NGOs and Private sector, especially by providing necessary support to the activities of NGOs)[Bangladesh Economic Review 2007:169].
3. Literature Review
Globalization, International Labour Migration and Poverty
No single definition can clear the concept of globalization. Stiglitz, Joseph, defined globalization as “The removal of barriers to free trade and closer integration of natural economics” (Stiglitz, Joseph, 2002).Globalization can be defined as the integration, without borders, of economic, information, science, defiance, education, skills, culture, politics, religions and social systems. It is not a new phenomenon. Early forms of globalization existed, for example, during the Roman empire, the Arab Empire and the Islamic golden Age when Muslim Traders and explorers established an early global economy across the old world resulting in globalization of crops, trade, knowledge and technology; and later during the Mongol Empire, when there was greater integration along the Silk Road. Global integration continued through the expansion of European trade in the 16th and 17th centuries, when the Portuguese and Spanish Empires after expanding to the Americas, reached out to all corners of the world (Haq, K. M, 2007:——). The benefits of globalization are multifarious: knowledge, trade, economy culture, technology etc. Nonetheless, foreign currency earning is the direct benefit a country can have form skilled manpower export to global markets (Haq, K. M, 2007).
Rapid globalization enhances fast-paced technological advancement it may restrict the employability of a large segment of a country’s labour force. However, the positive side of globalization is that it also provides new opportunities for economic growth and employment expansion. Today, the level of quality, skilled labourers that a nation possesses is deemed a critical factor in taking advantages of the global economy; China and India are the front runners in this pace (Haq, K. M, 2007).
International migration, the movement of people across international boundaries, has enormous economic, social and cultural implications in both origin and destination countries (Ozden, C. and M. Schiff, 2006:1). It is estimated that some 180 million people (3 percent of the world population) are living in countries in which they are not born (United Nations 2002). The flow of formal remittances from migrants to their relatives in their country of births as exhibited a rapid and accelerating rate of growth. The remittances flow has doubled in the last decade, reaching $216 billion in 2004; with 150 billion going to developing countries (Ratha 2005).It surpasses foreign aid and the largest sources of foreign capital for dozens of countries. As a result of these trends, migration issues have increasing become the focus of attention, both among governments of origin and destination countries, and within the development community (Ozden, C. and M. Schiff, 2006: 2).
Globalization has made migration much easier through better communications, dissemination of information through mass media and improvement transport, among others. It is the increasing trade and investment flows in the Asia region, which facilitated interest and awareness in migration to such countries as Japan, the republic of Korea and the Taiwan province of China (Wickramasekera, P. 2002:3).
Poverty is not one- dimensional phenomenon. It is multi-dimensional. A number of different concepts and measure of poverty relate to its various dimensions. Each of these dimensions has the common characteristic of representing deprivation of an important kind. The verity of poverty concepts is use in development policy communities reflects the variety of relevant deprivations (Sen. 1999).
Poverty is deprivations of income, health, education and empowerment. The longest tracking of world poverty is provided by Bourguinon and Morrisson (2002). These estimates cover the 1820 to 1992 period and include both the “poor” and “extremely poor”. The poor are defined as those living on less than US $ 2 per day (In 1985 purchasing power parity dollars). The extremely poor are defined as those living on less than US $ 1 per day (in 1985 purchasing power parity dollars).
Migration is an integral part of globalization (Drechsler, D., 2008). With globalization-the dramatic expansion of cross-border trade and investment –has comes an upsurge in international labour mobility. Falling costs of transportation and communication have reduced the distances between peoples, and the drive for better lives has motivated workers to move to areas where jobs are more plentiful and pay is better (World Bank, 2004). Recent debates on the merits and shortcomings of globalization have focused on the implications stemming from increased capital and goods flow. The international migration has received relatively little attention in the present debate on globalization
(Cordova E. L 2004).
Globalization has the five primary economic dimensions trade, finance, aid, migration and ideas. Increases in these dimensions of globalization, if managed in a way that supports development in all countries, can help to alleviate global poverty under certain condition (World Bank 2006).
3.2 Impact of International Labour Migration and Remittances on Poverty:
With globalization, international migration will continue to derive increasing levels of remittances to developing countries (World Bank, 2005). The most important development effect of migration is its direct impact on income and poverty levels in the source countries. By allowing workers to move areas where they are more productive and valued, migration leads to a direct increase in global output and income. (Ozden, C. and M. Schiff, 2006: 6).
World Bank launched the international Migration and Development Economic Research
Program, is divided into a number of focus areas. The main ones include (a) the impact of migration and remittances on development indicator, including poverty and inequality, investment (in both human and physical capital), entrepreneurship, and entry into capital-intensive activities; (b) the brain drain; (c) temporary migration, including under Mode4 of the General agreement on Trade in Services (GATS); and (d) the link between migration, trade and foreign direct investment (Ozden, C. and M. Schiff, 2006: 2). This section covers the impact of migration and remittances on poverty reduction, and human development-better education, wider access to health care, theoretically and empirical evidence.
3.2.1 Theoretical Evidence
Migration, Remittances and Poverty: Theories
Remittances can have an impact upon the receiving economy in different ways. Glytsos (2002) describes the channels through which remittances can affect the receiving country. There is no consensus in the literature as to whether the remittances inflows give a positive and negative effect on poverty. In the current thinking on migration and development, two opposing perspectives can be seen: the Migrant syndrome perspective, and the Developmentalist perspective.
The impact of migration and remittances on poverty are explained by two opposing theories: the” Migrant syndrome” perspective and the “Develop mentalist” perspective. The” Migrant syndrome” perspective views migration as a drain on labour and capital resources of the migrant -sending area. According to the perspective, migration may reduce income in migrant sending area if the marginal product of a migrants labour is large prior to migration and/or if migrants take productive capital (including human capital) with them when they leave. Migrants remittances may only partially compensate for the loss of labour and capital effects, and remittances may also lead to inflation and Dutch disease (Glytsos, N.P.2002)
From the pessimistic perspective, poverty may increase if migrants originate from poor households, or if the labour of poor farmers becomes less productive as a result of the lost labour and capital due to migration. For the migrant’s source country, migration can be viewed as labour export and remittances are payment for the export. In this way local production activities compete with migration for limited labour. The Dutch diseases effect on the economy can be noticed as production of tradable goods decrease.
The households with migrants will benefit (otherwise they would not migrate) but the rural poor households may not be among the beneficiaries. If migration is costly and risky, migrants may come from the middle or upper segments of the income distribution, and not from the poorest households. If migration adversely affects local production, the income of the poor may fall and poverty increases. Further, as production and income decrease, this may create negative multipliers and a downward spiral in local economic activity. The remittance-receiving households may not spend their income on locally produced goods and services, which would limit migrations potential to alleviate poverty through a higher demand for local production. Families that received remittances would in the case be able to buy imported goods, while the poor become poorer and income gaps increase.
The develop mentalist perspective, which is associated with the New Economics of Labour Migration (NELM), presents a more optimistic view. It views migration decisions as part of a household strategy to raise income, obtain funds for investment, and insure against risk. Remittances, or even the potential for remittances, can offset production and investment constraints, and start a development process in poor, rural areas.
This perspective sees the potential for migration and remittances to reduce poverty provide tat the benefits of migration and remittances may contribute directly or indirectly to the income levels of the poor. Remittances may contribute directly or indirectly to the income levels of the poor households that participate in migration. If migrants originate from poor households, remittances may directly reduce poverty by raising the income of the poor. Additionally, if remittances are used to buy local products and services, they can contribute to development through higher demand. In this case, other households in the economy can increase their income through a higher productivity (the multiplier effect) and income gaps can thereby decrease.
3.2.2 Impact of Remittances on Poverty: Empirical Evidence
This section is providing a review of the existing literature on the impact of international labour migration and remittances on poverty in the sending countries. Empirical evidence on the various development impacts of remittances remai