Remittances and the brain drain

In most destination countries, immigration policies are increasingly tilted toward the most skilled individuals. Whether this shift hurts economic prospects in sending countries, as argued by the traditional brain drain literature, is somewhat controversial. The most recent literature has focused on the link between skilled out-migration and educational achievements. In this paper, we emphasize a different channel. It is often argued that skilled migrants raise economic welfare at home thanks to a relatively larger flow of remittances. Skilled migrants typically earn relatively more and, ceteris paribus, will therefore remit more. However, they are also likely to spend a longer span of time abroad and also are more likely to reunite with their close family in the host country. Both factors should be associated with a relatively smaller flow of remittances from skilled migrants. Hence, the sign of the impact of the brain drain on total remittances is an empirical question. We first develop a simple model showing that skilled migrants may have indeed a lower propensity to remit home out of a given flow of earnings abroad. We then derive an empirical equation of remittances and estimate it on a large panel of developing countries. As a measure of the brain drain, we use the dataset by Docquier and Marfouk (2004) that in turn builds on the pioneering work of Carrington and Detragiache (2004). We find considerable evidence that the brain drain is associated with a smaller flow of remittances.remittances, migration, brain drain

The Brain Drain: an Unmitigated Blessing?

Increasingly, immigration policies tend to favour the entry of skilled workers, raising substantial concerns among sending countries. The “revisionist” approach to the analysis of the brain drain holds that such concerns are largely unwarranted. First, sustained migratory flows may be associated with an equally large flow of remittances. Second, migrants may return home after having acquired a set of productive skills. Finally, the ability to migrate abroad may boost the incentive to acquire skills by home residents. This paper takes a further look at the link between skilled migration, education, and remittances. It finds little support for the revisionist approach. First, a higher skilled content of migration is found to be associated with a lower flow of remittances. Second, there is little evidence suggesting that raising the skill composition of migration has a positive effect on the educational achievements in the home country.

Foreign aid and fiscal policy

Foreign aid has been on a downward trend since at least the early eighties. Despite the commitments of donor governments, the GDP share of foreign aid for DAC countries has fallen to slightly more than 0,2% in the early part of this decade. The purpose of this paper is to explore the macro determinants of the amount of foreign aid. Surprisingly enough, not much attention has been devoted in the literature to this issue. Most of the research has focussed either on the effectiveness of aid (“does aid promote growth and help alleviating poverty”?) or to the cross country allocation of a given amount of foreign aid (“is foreign aid motivated by donor’s political and commercial interests or by recipients’ needs?”). In both cases, the total aid budget is taken as given and its determinants remain therefore unexplored. Our main finding is that the size of the budget aid is a function of the donor country’s fiscal situation, even after controlling for the government’s political orientation, the cyclical position of the donor economy, and its income per capita level. In light of these results, we argue that advocates of foreign aid should strongly lobby in favour of fiscal discipline. The alternative strategy of pushing for a more lenient budgetary treatment of foreign aid may be loaded with risks, and even turn to be counterproductive, particularly if the list of “virtuous” exceptions becomes exceedingly long. This is exactly what seems to have happened with the revision of the Stability and Growth pact.foreign aid, fiscal policy

Adjustment, investment, and the real exchange rate in developing countries

At the center of the controversy about effectiveness of"adjustment with growth"loan packages from the IMF and the World Bank has been the heavy emphasis on real exchange rate depreciation as a way to restore external balance and elicit a positive supply response. The authors find that adjustment has been far more successful for countries exporting manufactured goods than for countries exporting primary goods. Devaluation of the exchange rate in countries exporting primary goods appears to be ineffective. Most of their adjustment has taken the form of reduced spending rather than increased supply. As a result, they have not resumed sustainable growth. The longer term prospects for exporters of manufactured goods are much brighter. They show more signs of improving efficiency and less decline in investment than do exporters of primary goods.Economic Theory&Research,Environmental Economics&Policies,Economic Stabilization,Macroeconomic Management,Achieving Shared Growth

FAKTOR-FAKTOR YANG MEMPENGARUHI PENGELUARAN BIAYA JASA TELEKOMUNIKASI PADA KERAJINAN KAYU JATI BOJONEGORO

This research is a type of case study research at the Regional Market Management Department of Malang Regency with the title "On the Effectiveness of Internal Control System Implementation Levy Collection of Market To Increase Revenue Malang Regency." The purpose of this study was to determine the effectiveness of internal control system in implementing the collection of market fee and levy revenue contribution to the region income markets Malang. The stages of analysis used by the authors in this study were: 1). Qualitative analysis by evaluating the effectiveness of internal control system on the implementation of the levy collection market. 2). Quantitative analysis consisted of: a. Effectiveness Analysis Market Levy Collection. b. Analysis of Growth / Development Levies Revenue Market. c. Levies Revenue Contribution Analysis on Regional Income Markets. Results of research at the Regional Market Management Department of Malang Regency showed that: 1). Internal Control System in the implementation of the levy collection market has been running effectively. This is evident from the organizational structure that has been well-organized and have separate functional responsibilities appropriately, document recording procedures used to monitor the revenue is good, there is a healthy practice of every employee Markets Department in performing its duties and functions in accordance with the procedure have been determined, and the performance and quality of a good employee in carrying out its duties and functions in accordance with its responsibilities. 2). Receipts market levy to contribute to the region income Malang. With the optimal market acceptance, the levy source revenue increases. The conclusion of this study is that the internal control system on the implementation of levy collection market has been running effectively so that the acceptance in accordance with market levies that have been determined and capable of contributing to the region income so that the original income also increased

Is the Brain Drain an Unmitigated Blessing?

migration, brain drain, eduction, remittances

Export supply, capacity, and relative prices

In the neoclassical approach to specifying an export supply equation, relative prices and capacity are assumed to play a crucial role in domestic firms'decisions to supply exports. In the Keynesian approach, the willingness of domestic firms to supply foreign markets is considered to be largely a function of domestic demand pressure. Keynesian analyses do not allow for the impact of relative prices. This paper blends the two approaches in a model,in which a firm is assumed to choose, first, the level of productive capacity and, then, one period later, to determine production and allocation between foreign and domestic markets on the basis of realized prices, demand conditions, and installed capacity. The conclusion: both prices and capacity are significant determinants of export supply.Geographical Information Systems,Economic Theory&Research,Environmental Economics&Policies,Access to Markets,Markets and Market Access

Does Family Control Affect Trade Performance? Evidence for Italian Firms

This paper examines whether the export decision of firms is affected by their ownership structure, specifically it looks at whether family control is an obstacle to entering foreign markets. The underlying assumption is that family firms are risk averse. Risk aversion may be an obstacle to entering foreign markets, as far as these are perceived as more volatile and risky than the domestic one, particularly when such choice entices bearing relatively high sunk costs. We develop an illustrative theoretical model that shows how the combination between high risk aversion and low initial productivity may hinder family firms’ decision to enter foreign markets, particularly distant ones. The empirical analysis, based on a detailed panel data set of Italian firms covering the years from 1995 to 2003, confirms such predictions by showing that family controlled firms do indeed export less than other type of companies even after controlling for firm heterogeneity in productivity, size, technology and access to credit.

The Impact of Trade Liberalisation on Enterprises in Small Backward Economies: The Case of Chad and Gabon

This paper examines the impact of trade and fiscal reforms and of the 1994 devaluation of the CFA franc on enterprise development in Chad and Gabon. These reforms provide a natural experiment to assess the impact of trade liberalisation in countries with a small and backward manufacturing sector. The empirical analysis is based on a new panel data base covering virtually the whole population of manufacturing firms in Chad and Gabon, and containing data spanning from the year before to two years after the reforms. The paper finds that although firms’ response to changing incentives was non-negligible, with a shift of output from non tradable to tradable and an increase in productivity, the reform process was unable to generate a virtuous and self-sustained circle, where export expansion brings a generalized productivity increase which in turn feeds on further export growth.trade liberalization; enterprise development; output, productivity and export performance