The departure of skilled workers in the developing world may, contrary to popular belief, do more good than harm. Photo:banoiff (flickr)

When educated professionals depart a developing nation, does greater wealth arrive? Some scholars in the international development community are saying farewell to the notion that the ‘brain drain’ hinders impoverished countries from expanding human capital and increasing the growth rate.

Exit brain drain. Enter brain gain.

The brain drain has long been perceived as a constraint on the progress of developing nations—much-needed doctors, professors, and scientists often abandon their homelands in exchange for better salaries and more comfortable lives in the developed world. However, research indicates that if countries can hit a sweet spot of sending around 20 percent of their talent to other countries, the residual impact of those individual losses will actually spur economic and educational growth at home.

But how? One way is through remittances, cash transfers from an individual in one country to another elsewhere. Take Ghana, for example. Some figures place remittance levels at $400 million per year, on par with the country's two biggest exports, cocoa and gold, which account for 25 percent of the foreign exchange earnings of the nation. To put this figure in perspective, in previous years Ghana has received around $650 million in foreign aid. Compared to other developing nations, that's low—in some, “remittances are more than double the amount of foreign aid,” as reported by Foreign Policy.

Furthermore, remittances can withstand the tests of natural disasters, and political and economic crises. Chances are an economic and political collapse in Egypt would deter foreign investment but encourage a migrant to increase his or her monetary givings to Egyptian relatives. Now those are derivatives Fannie and Freddie should have bet on.

Much of the new economic activity happening in African countries like Ghana are catalyzed by residents who have traveled or lived in developed countries. New York University professor William Easterly refers to this as “brain circulation,” that is, the movement of ideas and investments from educated professionals between their homes and the West.

Often, brain drainers will eventually return to their country of origin or maintain residency both abroad and at home. Not only do these individuals in turn support the economic development of their hometowns, but they also inspire members of the community to invest in education. According to Easterly, most students are motivated by the idea of living abroad, noting that “if this prospect is closed tightly, this may have an effect on the effort levels of students in the system, and therefore the quality of the graduates of the school system.”

Additionally, travel expands capital horizons. Robert Guest notes in Foreign Policy that “countries trade more with countries from which they have received immigrants.” A migrant living in the UK might inform his sister in Somalia that there is demand in his city for a specific talent she may have the skill sets to provide. Diaspora thus encourages a fluidity of ideas, innovations, and supplies and demands between often disconnected parts of the world.

Investing money abroad can be the best way to bring more of it home. Brainpower may work that way, too.

A foreign domestic worker looks after her elderly client. Photo: Jerry Wong (flickr)

From low-tech light bulbs in the Philippines to microfinance in Nicaragua, our team of young writers covered lots of ground this year.

Here's a rewind on the themes that struck the strongest chords with readers, and the money quote from each piece. As we head into 2012, odds are that these big ideas will keep resonating.

Lack of electricity is a huge barrier to overcoming poverty by
Megan Kelly, Feb. 10:

As long as those hundreds of millions remain in the dark, they will remain poor," and yet bringing electricity to areas that have none lacks global funding and attention. It's not even part of the Millennium Development Goals.

Megan made a sweeping case for attention to energy poverty, a theme we've continued to cover.

Microfinance isn't a magic bullet by Laura Mortara, Jan. 24:

And any situation involving loan and credit is dangerous, especially when people are allowed to borrow irresponsibly. The failure of microfinance in India is largely due in part to MFI's shifting their focus from non-profit to profit-making industries and the corruption that follows thereafter. In addition to this, microfinance in India expanded way too quickly without the experience or infrastructure to support it.

Laura rounded up the previous year's run of bad news about the microfinance sector with a wealth of links to the best coverage.

Used soda bottles light up the world, for free by Brynn Opsahl, Aug. 18:

A used plastic bottle filled with water and a touch of bleach is placed in a hole of a tin roof. For up to five years, 50 watts of light fill up the once-gloomy windowless shack any time the sun is out

Brynn's look at this shockingly simple, effective idea was one of several articles to land in the Christian Science Monitor as part of a partnership we forged with them this year.

Does China's rise mean U.S. decline? by Chris Sharp, Feb. 4:

According to a recent poll by the Pew Research Center, 44 percent of Americans believe China is already the world’s top economic power, compared to 27 percent who think it’s the U.S.

Chris's piece rebutted the popular cliche about China's looming global power, drawing on a post by Foreign Policy's Daniel Drezner to argue that the U.S.-China relationship is about interdependence, not domination.

The female remittance economy: A hidden global network of mothers and money by Eliza Slater, May 11:

Remittances are a significant part of an unofficial global aid network, worth $325 billion last year. That’s three times the size of official foreign development aid spending.

Eliza zoomed into the human scale of some staggering numbers, showing how shipping cash to one's relatives abroad has become, among other things, an important part of modern femininity around the world.

As we mentioned last week, Global Envision is planning some big new initiatives in 2012. Stay tuned—we're looking forward to talking with you about whatever comes next.

A family looks north over the Mexican border near Tijuana. Photo: Nathan Gibbs (flickr)

Is Mexico on its way to becoming the new Land of Opportunity?

Illegal immigration from Mexico to the United States has plummeted, leaving experts scrambling for explanations. Recent statistics are showing an unprecedented drop in illegal immigration from Mexico to the United States, Douglas Massey of Princeton's Mexican Migration Project told the New York Times.

For the first time in 60 years, the net traffic has gone to zero and probably is a little bit negative.

The findings bring an unexpected twist to the heated illegal immigration debate of the past decade.

Life for illegal immigrants in the United States has unarguably become harder in recent years. Government crackdowns on businesses make finding employment without papers a daunting task, and the United States’ current economic situation significantly decreases the financial incentive for prospective immigrants.

However a recent article from the New York Times gave a surprising explanation for the decline. It’s not that the United States is getting worse. It’s that Mexico is getting better. Rapidly improving social and economic prospects in Mexico have made staying home more attractive than immigrating to the United States.

Long-term research indicates several related factors within Mexico that may explain the immigration decline: birth control and education. Birth control efforts have dramatically decreased the fertility rate in Mexico from 6.8 children per woman in 1970 to just two today. Furthermore, government initiatives seem to be having a positive impact on education. “Around half the students now move on to higher schooling, up from 30 percent a decade ago,” according to the New York Times. Fewer workers with more schooling indicates a promising, prosperous future for Mexico, depending on which statistics you rely on.

The findings invite significant debate — many economists diverge over official indicators of Mexico’s economy. Whatever the true figures, though, only time will tell what the full impact of this new trend in immigration will be. A study by the World Bank indicates that Mexico will need to be prepared to compensate for factors linked to immigration such as decreased remittance incomes, or portions of migrant workers' wages sent home to assist their families, that currently account for up to 15 percent of gross state product in the poorer states of Mexico and have a range of positive influences on economic development.

In the meantime, the evidence suggests that for many Mexicans, the grass is no longer greener on the other side.

A foreign domestic worker looks after her elderly client. Photo: Jerry Wong (flickr)

Developing-world mothers, too poor to feed their families, are increasingly finding work abroad and sending the fruits of their labor to the children they will not raise.

Their payments, called remittances, are a significant part of an unofficial global aid network worth $325 billion last year. That’s three times the size of official foreign development aid spending, according to an article in the New York Times.

The women who choose this life aren't just redefining the foreign aid landscape. They are also redefining motherhood, says the Times.

Across the world, millions of mothers have made this sacrifice for their children — forgoing a life with them in hope of ensuring a better life for them. These women venture far, often into the uncertain world of undocumented domestic work that in effect keeps them hostage in their host countries.

And yet, in spite of the hefty financial contribution and personal toll, remittances — and remitters — remain a relative blind spot on the global development map. But their invisibility may not last long. Remittance flows worldwide keep swelling: The World Bank project they will reach $374 in 2012, or nearly $50 billion more than last year’s total.

India, China, Mexico, and the Philippines are the world’s top four remittance recipients, says the New York Times and in a number of smaller developing countries, remittances make up more than 20 percent of GDP and provide the largest source of foreign exchange.

Striking though these figures may be, it’s clear that remittances alone cannot fuel development. They may funnel developed world-sized wages into the developing world. But most of these micro-transfers are themselves not sufficient and, more importantly, not coordinated enough to support the large-scale projects that aid and development institutions traditionally take on. In short, remittances may enable the children left behind by migrant mothers to get an education or access health care. But unless they are strategically pooled and channelled, they probably won’t create jobs or fund the construction of schools and hospitals.

Nonetheless, "women migrants have become a formidable force for development,” says the New York Times. "When permitted, migration is a major economic equilibrating mechanism" and an important instrument for poverty alleviation, according to the World Bank.

While there is relatively little formal data on remittances, anecdotal accounts abound. Recent analyses of these sources are revealing interesting trends, particularly about the special role and behavior of female remitters. Women, who constitute 51 percent of developed countries’ migrant worker population, generally earn and therefore remit less than men, yet the fraction they send home tends to be higher and more consistent, even during crises, according to the New York Times article. Women usually channel their incomes to necessities such as food, health care and education, while men tend to spend more of their wages on recreation.

There is another reason remittances should be acknowledged as promising contributors to development, emphasizes the New York Times: they work.

By cutting out institutions and (often corrupt) governments, remittances more nimbly [address] needs like raising birthweight or lowering [the] number of school drop-outs. They [are] also a powerful cushion in times of conflict or natural disaster, when remittances tend to increase, driven by an empathetic diaspora.

The world’s remitters care for their own by leaving them for strenuous lives in far-away places. And they are also thinking bigger, forming associations and networks to pool the aid they send home and to create space for solidarity and cultural expression with other women who tell the same story. Their efforts have been unexpectedly effective and significant, if not (yet) widely appreciated as powerful agents of development and aid.

More than half of Tajikistan's labor force works abroad, which gives them the highest remittance-rate in the world.

Men will often leave their wives and children for years at a time. These "left behind" Tajik women often raise their children and eek out a living on their own, a burden evident in Mashid Mohadjerin's stunning collection of photographs featured in the New York Times' Lens blog.

The travails these women face can be seen in the shadowed lines etched into their brows, or the mud caked around their fingers from a day in the fields. But one can also see their hope and perseverance – in the stern gaze of a women’s organization leader in the town of Khorogh, or in a teacher’s tiny smile as she wipes her student’s face. They are, if you will, the Rosie the Riveters of Tajikistan, picking up where the men have left off — but with no foreseeable end to that lifestyle.

Unemployment is already high in Mexico. It could be even higher if Mexican workers in the U.S. went back. Photo: Aneas (flickr)

Mexican workers often come to the United States to earn money and send it to their relatives back home. But NPR reports that as the U.S. economy has gotten worse, some of these worker's families are sending them money from Mexico.

It's a phenomenon that could have a positive economic impact: These reverse remittances, as they're called, allow the migrants to keep searching for higher-paying work than they could get in Mexico, explains an NPR report. These reverse remittances may also prevent a flood of returnees from further devastating Mexico's economy and increasing unemployment.

When the U.S. economy rebounds, these workers are well-positioned to start sending remittances back to their families again.
These remittances play a big roll in Mexico's economy — they're the country's second-largest source of foreign income.

Still, the total dollar amount of reverse remittances remains small in comparison to the traditional southward flow of cash and there is no reliable data about its overall volume, points out a World Bank report.

As one Mexican father of a migrant worker told the New York Times, “We have an obligation to help them [until they find work again]. They’re our sons. It doesn’t matter if they are here or there."

The interior of a number 2 subway train in NYC. Photo: Kevin H. (flickr)

Jeton Qallaku, a Bronx resident, sends about three percent of his $60,000 salary back to his parents and sister in Kosovo each year. Qallaku's family mostly uses these remittance payments to keep up with their water, sewage, and electricity bills.

Jeton immigrated to New York from Kosovo in 1996, and has been sending money home ever since. Kosovo is one of the most remittance-dependent countries in the world. In 2008, remittances from Kosovar Albanian migrants accounted for 13 percent of the country's economy, according to World Bank figures. In that same year, global remittances totaled $308 million, a record high. But in the past year and a half, remittances have taken a hit as the world reels from the economic crisis.

Jounalism students at Columbia University teamed up with GlobalPost.com to profile New York area migrants to learn how the economic crisis is affecting their capacity to send money home. The students captured stories from migrants while traveling along New York's #2 subway line, which connects Brooklyn to the Bronx. Jeton's story is one of many included in this project, entitled "Payback: Remittances in New York City," but the project also features stories of migrants from Ghana, Haiti, Kosovo Albania, Mexico, Yemen, Pakistan and China. These very personal stories are told through video content and interactive maps.

Like many young people who dream of coming to the wealthy Gulf States to find work, 27-year-old Anesu Gamba came here to Dubai three years ago to escape Zimbabwe’s crippling poverty.

I met Anesu, a soft-spoken man with a round face, at the Department for Naturalization and Residency in Dubai. He went there to cancel the visit visa he requested for his brother because he could no longer afford the ticket. “I wanted him to come and enjoy Dubai, he was so excited,” Anesu said, gazing sadly at the ground.

In the beginning, his new life in the Gulf was just as he had imagined. “In the first two years, I lived in a dream, I had friends, and I bought a car," said Anesu. He was also able to send money to his mother, father and younger brother in Zimbabwe, none of whom have jobs.

But last month, Anesu didn't send his family any money. He was among several laid off by the small public-relations company that hired him as a graphic designer. The company blamed the downsizing on the global economic downturn.

About a quarter of Zimbabwe's population has gone abroad, and together they send home anywhere from $360 million to $1 billion in remittances, reports the UN news agency, IRIN. These remittances are often credited for saving the country from complete collapse.

But the burden of supporting family members abroad is heavy for those in the Gulf. Many, like Anesu, have cut other costs to keep up the remittances. Anesu sold his car and moved into a shared apartment with three other migrants. “Sending money home is not an option, it’s an obligation," he told me. "I just can’t let my family down."

Finding a new job in Dubai isn't easy these days, but returning to Zimbabwe isn't very tempting. Less than 6 percent of people living in Zimbabwe are employed, the UN said recently. At its peak last year, inflation reached 231 million percent and Save the Children reports that more than 75 percent of the population lives in abject poverty.

Anesu thinks his chances of finding a job are better in Dubai. "I have one month to find a job after the cancellation of my visa," he said. "I came to Dubai with hopes and dreams. I will try my best to find a job, even as a waiter, a dishwasher, I don’t care. At the end, I don’t have many options, do I?"

Earlier this month, Obama began taking the first small yet significant steps to implementing a different relationship with the island by signing new measures into law. These new measures will allow Cuban-Americans to send more money to family members and travel more freely between the U.S. and Cuba.

Since 2004, travel to Cuba under the Bush administration was limited to once every three years for Cuban-Americans, with visits limited to only nuclear family and no longer than 14 days. Remittances were also only allowed to be sent to nuclear family and limited to $300 every three months.

In contrast, the new measures under Obama remove all restrictions on the amount and frequency of remittances and travel to the island. The changes also make it easier for telecommunications companies to do business in Cuba, which would allow quicker and easier access to the Internet for Cubans.

Cuba has been receptive to these changes. Raúl Castro has unexpectedly and publicly declared that Cuba is ready to "discuss everything" with the U.S. There are still no official plans for future talks between the two countries. Until then, the question remains of whether or not these measures will help to significantly alleviate poverty in Cuba and improve people's standard of living.

In Cuba, the mood among citizens ranges from cautiously optimistic to skeptical. An article in the St. Louis Post Dispatch profiles Cuban citizens like Ivan, a computer programmer, who expresses hope that Obama will bring about a much needed change. "Obama, to Cuban people, is our, how do you say, our hope," Ivan says. "We believe he wants to lift restrictions on Cuba. To Cubans, he is a very good presidente."

For the most part, the Cuban-American community has reacted with enthusiasm to the new measures. The Cuban American National Foundation, the leading organization for Cuban exiles in Miami, has expressed its support for a new course in U.S.-Cuba policy, calling for "a break from the past" that would "chart a new direction."

In Little Havana, a strongly Cuban neighborhood in Miami, residents seemed to welcome change in U.S.-Cuba relations. "It is stupid to have no relationship with Cuba," said a middle-aged man, identifying himself only as Alex. "It didn't work for 50 years... The way the system will change is by having a relationship."

In a country where the average salary is $20 a month, the ability to receive money from relatives abroad is likely to become an economic lifeline for thousands of people. However, with U.S. economic sanctions still in place, BBC correspondent Michael Voss thinks the remittances will have little effect:

It will give more spending power, it will allow people to buy mobile phones, possibly, you know, have a slightly better standard of living. But in terms of kick-starting the economy, I don’t think we’re going to see that at all.

Nevertheless, with Cuba's poverty level as one of the lowest in the developing world, even small improvements could make a noticeable difference. With the Obama administration now planning informal meetings with Cuban diplomats, hopefully any future change in U.S.-Cuban policy will make the Cuban people its central focus.

Tajik women take on the bulk of responsibility while husbands and sons have left the country for migrant work. Photo: Thatcher Cook for Mercy Corps

Tajikistan has the highest remittance rate in the world — a recent World Bank report says that around half of the Central Asian country's money comes from workers abroad. But a weakened economy in Russia, where 98 percent of Tajik remittance income originates, has drastically slowed cash flow back to Tajikistan and its seven million inhabitants.

EurasiaNet reports that between September and November of last year, remittances from migrants dropped more than 50 percent. That decrease alone accounts for a 20 percent drop in the Tajik GDP.

Nearly one million Tajik men work abroad. These workers face growing tensions as local workers fight to keep their own jobs, feeling threatened by the guest workers who poured into Russia and Kazakhstan during better economic times in those countries. The New York Times says that during the migrant boom, the portion of Tajiks living below the poverty line dropped by one-third, to around 50 percent.

At home, Tajik women are left to manage the fields and young boys are the primary wage earners. Remittances help keep Tajik families out of extreme poverty, reports EurasiaNet's Rob Cavese, but because most transactions are cash-based and few Tajiks have bank accounts, the concern is that most funds from abroad are used for immediate consumption and not for investment.

With so many in Tajikistan relying on outside wages, Cavese writes, there is little incentive for the government to initiate a restructuring of domestic wages.

“The Tajik economy is not sustainable without migration,” Dilip Ratha, a senior economist at the World Bank, told The New York Times. “It is not diversified. People are the most important resource they have.”

The U.S. financial crisis is affecting its southern neighbor. Photo: Allen Ormond (flickr)

As Americans grapple with plunging retirement savings, declining home values and rising gas prices, our neighbors to the south are suffering, too.

A decline in both exports — most of which go to the U.S. — and remittances are putting the brakes on the Mexican economy.

Mexican manufacturers rely heavily on U.S. consumers; Americans buy more than 80 percent of the country's exported goods. But as American consumers cut back, Mexican manufacturers are laying off workers. The Arizona Republic ran a story quoting one factory manager who cut nearly half his staff after sales dropped 40 percent.

The slowdown in the manufacturing sector has a trickle-down effect. In Nuevo Laredo, taco vendor Jorge Flores has lost 40 percent of his business in recent weeks due to the economic hard times.

Also hurting the Mexican economy is the decline in money sent back to Mexico from Mexicans living in the U.S., also known as remittances.

One in four families in Mexico relies on remittances as its primary source of income. And remittances have dropped by 12 percent in the past 12 months.

Fewer visits to Western Union are partly due to a fall in U.S. home construction, an industry staffed heavily by Mexican laborers. One day labor center in Los Angeles, for example, says there's been a drastic drop in demand for workers.

Help is on the way, according to Mexican President Felipe Calderon: Yesterday Calderon proposed a 65.1 billion pesos ($5.26 billion) stimulus package to shore up the flagging economy.

Photo: Geoff Oliver Bugbee for Mercy Corps

A recent survey by the Inter-American Development Bank found that over the past two years, the number of Latino immigrants sending money home from the U.S. has dropped by more than 20 percent.

Though the amount of money transferred from the U.S. to Latin America has increased by about 1 percent to $45.9 billion, the Bank estimates that more than three million Latin American workers no longer send remittances to their home countries. Higher prices, fewer low-paying jobs, and a crackdown on illegal immigrants were cited as reasons.

The survey should be cause for concern in Latin America, where remittances have played a significant role in reducing poverty and promoting economic growth. Indeed, Professor Rafael Pampillon of Spain’s Instituto de Empresa business school notes that the total amount of remittances to Latin America is greater than the combined amount of foreign investment and development aid to the region. A May 4 editorial in the New York Times spells out the potential negative impact:

Immigrant workers are not just vital to the American economy, their money transfers are a critical bulwark against poverty for millions of people south of the border. Cutting off that lifeline will lead to more misery in some of the poorest parts of the hemisphere — and it will feed the desperation that sends more migrants to the United States.

What impact is the U.S. economic slowdown having on developing countries? Matt Homer of the World Politics Review writes that the weakening U.S. dollar is having an adverse effect on individuals in developing countries relying on remittances for large parts of their income. A bigger problem, however, is that the negative impact of the declining dollar is likely to go beyond the individual level. For a number of developing countries, remittances make up a significant percentage of total GDP, and several countries are already expressing concern that a decrease in remittances could hurt their entire economies.

In Tonga, for example, remittances account for just over 32 percent of the country’s total GDP. Yet because up to 80 percent of all remittances come from sources in the U.S., there is concern that continued declines in the U.S. economy “will hit Tonga extremely hard.” Economists in Nicaragua are also predicting that “any decline in the amount of remittances will undoubtedly affect consumerism within the Nicaraguan economy.” While around 40 percent of Nicaraguans receive remittances, most of which come from the U.S., economists estimate that almost 90 percent of remittance money sent to the country is spent in the local consumer economy.

To some the word "immigration" evokes an image of people standing in line at Western Union, waiting to wire money home to families for groceries and clothing. It happens thousands of times each day all over the world. All those remittances — the small amounts of cash wired across borders — add up to a whopping $300 billion a year.

Dilip Ratha believes this $300-billion industry can play an important role in international development. He's a World Bank employee who is working to make it easier for migrants to transfer money and direct the cost savings towards economic development in their own countries.

Skeptics argue that if remittances equaled development, Mexico would look like Switzerland. Ratha might argue that without remittances, Mexico's economy might look a whole lot worse. His new paper suggests that Africa could add as much as $3 billion to public coffers just by reducing the costs that migrants pay to send remittances. (Currently, charges on these cross-border money transfers can be as high as 10 percent.)

Ratha hopes to prove that hundreds of billions of remittance dollars can be funneled toward poverty alleviation by making simple policy changes.

His personal story has shaped his beliefs. In the U.S., he earns a salary that is 100 times what he could have earned in his birthplace of India, and his own remittances have helped build schools and pay medical bills there.

And while the negative impacts of immigration often make headlines, Ratha stresses that there are costs of not immigrating, too — costs borne by people living in poverty and by everyone in the global economy.

While the immigration debate in the United States is largely focused on the U.S.-Mexico border, an article from National Geographic looks a bit farther to the south. An estimated 400,000 migrants from Central America cross the border into Mexico every year, and though some stay to work in Mexico, most are headed for the U.S.

The economic prosperity of the U.S. has a strong pull effect on the Latin American poor, and the money that migrant workers send home to their families is having an increasingly large impact on their national economies. In Honduras, for example, remittances sent home from the U.S. made up one-fifth of the country’s gross national income in 2006.

“There is no solution to this,” a former Chiapas state official said wearily, after ticking off a list of southern border upgrade programs that have fizzled into ineffectiveness over the past decade. “You can put all the control measures down there that you want, but it’s not going to be fixed. The solution is to eliminate poverty.”