The Impact of International Migration on the Economic Development of Countries in the Mediterranean Basin

Abstract

November 1995 marked the starting point of the Euro-Mediterranean Partnership (the Barcelona Process), a wide framework of political, economic and cultural cooperation between the Member States of the European Union and the Southern and Eastern Mediterranean Basin countries. The recent intergovernmental summit celebrating the 10 years anniversary of the Partnership, and the qualified comments that followed, have clearly shown the need of a stronger financial and political commitment of the EU in the region to reduce the existing economic gaps and support the process of economic reform. Asymmetric trade liberalization and the competitive pressure that followed on the fragile production system of the Mediterranean Partner Countries (MPCs)1 coupled with a limited and erratic flow of European foreign direct investments have exacerbated the causes motivating migration. The new political development in the region with the establishment of the European Neighborhood Policy (ENP) and the bilateralisation of aid and cooperation frameworks has both reduced the scope for a regional and multilateral approach to the issue of economic cooperation and introduced a security focus on the migration phenomenon. The relationship between migration and development in the Mediterranean region becomes therefore an issue that must be increasingly dealt in a bilateral approach. When it comes to migration and economic relationships, in the Southern shore of the Mediterranean Basin is possible to draw a demarcation line between those countries that are highly dependent on oil (Jordan, Syria, Egypt, Lebanon) in the sense that migration and trade are dependent on the fluctuations of the economies in the Arab Gulf countries and less on Europe; and countries that are more dependent on trade and aid from Europe (Morocco, Tunisia, Algeria, Turkey). Israel is a country of immigration, and migration from Palestinian Occupied Territories is a regional phenomenon, especially because the high number of refugees in Jordan and Lebanon. Even if Algeria is an oil producer country, the historical relationships with Europe place her in the second group. Keeping this in mind, this paper will analyze the impact of migration on countries of origin by focusing on the role played by migrant workers' remittances in stimulating local economic development. Adopting a perspective combining the structuralist and developmentalist approaches, and by using the data available, the analysis will attempt to highlight the potential positive and adverse economic effects that migration has on migrant sending countries. From the outset, it is needed to underline that the limited coverage of this phenomenon in the Mediterranean Basin makes the formulation of consistent policy recommendations a thorny tasks and qualified conclusions will be made only when qualified data are available. The large amount of remittances sent home by migrant workers worldwide has spurred an intense debate on their potential effects for poverty reduction, financial stability, and economic development of migrant sending countries (Ratha, 2003; World Bank, 2006; Maimbo and Ratha, 2005; Page and Adams, 2003). Public authorities are interested in attracting hard currency, regulating and taxing money; international financial institutions such as the World Bank and the International Monetary Fund and development aid agencies alike are looking at remittances as a new development mantra. Non governmental organizations realized that immigrants associations can be potential development partners and collective remittances a source of private capital that can help supplementing their funds. In the Euro-Mediterranean region this is not exception. MPCs have received remittances for 15 billion USD in 2004, i.e. a little 10% of the global inflow received by developing countries and about seven times European Union development grants and loans through the European Investment Bank. Even though the surge in workers remittances represents the failure of development and employment policies in migrant sending countries (de Vasconcelos, 2005), their positive effects on poverty reduction have been demonstrated (Page and Adams, 2003) while their effects on development are far from being obvious (Gallina, 2006).