Since the refugee crisis and the continued arrival of migrants on the southern European coasts, pressure on the European Commission and the most affected EU member states has been high to find ways to effectively manage (and stem) migration flows. In accordance with the perceived wisdom that support for low income countries stops people leaving to seek a better life abroad, aid is now increasingly seen by policymakers as an essential part of a long-term strategy to tackle the “root causes of migration.”
Yet the existing research by leading development experts has long indicated that development aid most likely leads to more migration by enabling poor people to finance it—rather than discouraging it. Within the framework of the Mercator Dialogue on Asylum and Migration (MEDAM) project, researchers Mauro Lanati and Rainer Thiele revisited the aid-migration relationship and found that development aid affects migration decisions differently depending on whether it effectively raises household incomes or improves public services.
Development aid can dampen migration if it improves public services…
When aid primarily raises domestic incomes, migration can be expected to increase as more people can finance the costs of migration. Only at much higher development levels do rising incomes provide an incentive to stay—when the potential income gains to be achieved abroad have become very low. However, following the international community’s agreement on the Millennium Development Goals, development aid has been reoriented toward non-monetary objectives, particularly in the area of basic health and primary education. Focusing only on the income dimension of development disregards these strategic shifts.
Using a sample of 25 donor and 129 recipient countries over the period 2004–2014, and controlling for a number of other determinants of migration choices, Lanati and Thiele find that a rise in development aid, which improves nonmonetary dimensions of well-being, is associated with falling emigration rates. The association between this type of aid and reduced migration rates applies to a wide range of service improvements, from better schools to cleaner air and more reliable state institutions.
Thus, their research provides robust evidence that foreign aid with a significant public services component tends to reduce emigration, and policymakers in donor countries correctly perceive a scaling-up of development aid as a possible instrument to curb immigration.
…but it is only one of many factors influencing migration
At the same time, the results also suggest that an unrealistically large increase in aid would be required to reduce emigration rates in a sizeable manner. A doubling of aid improving public services would be required to lower emigration rates by a still fairly modest 10–15 percent.
“The impact on migration of scaling up aid is much less clear-cut than policy-makers often state or appear to believe themselves as aid is only one of many factors influencing migration decisions,” explains Thiele. “Many people are not migrating solely to improve their economic prospects. Instead, they might seek safety, or leave their homes in response to climate change or a total lack of any economic opportunities. In the best case, development aid and humanitarian aid will also mitigate the drivers of migration, but more generally, the primary objective of aid should be to foster development and reduce poverty in recipient countries—regardless of any indirect impact on emigration. If, say, income-generating projects such as providing improved seeds to small-scale farmers were desirable from a development perspective, it would be problematic if such projects were not realized because a small fraction of beneficiaries might emigrate as a result.”
Lanati, M. and R. Thiele (2018). Development aid can dampen migration if it improves public services. MEDAM Policy Brief 2018/2. IfW, Kiel.
Lanati, M. and R. Thiele (2018). Foreign assistance and migration choices: Disentangling the channels. Economics Letters 172: 148–151.
Lanati, M. and R. Thiele (2018). The impact of foreign aid on migration revisited. World Development 111: 59–74.
Lanati, M. and R. Thiele (2018). How Donors Respond to Refugee Movements. In: 2018 MEDAM Assessment Report on Asylum and Migration Policies in Europe, MEDAM (Mercator Dialogue on Asylum and Migration):109–115. IfW, Kiel.
Lanati, M. and R. Thiele (2017). Can foreign aid affect migration decisions? In: 2017 MEDAM Assessment Report on Asylum and Migration Policies in Europe, MEDAM (Mercator Dialogue on Asylum and Migration): 77–80. IfW, Kiel.