The Complex Effects of Development Aid on Migration

Does development aid curb migration? Researchers Mauro Lanati and Rainer Thiele show how aid can deter would-be migrants when it goes to public services, but argue that it would take an unrealistic increase in aid to significantly lower emigration rates.

Written by Mauro Lanati, Rainer Thiele Published on Read time Approx. 4 minutes
African and European leaders met in Paris in August 2017 to try to build a “new relationship” aimed at stemming the flow of migrants into Europe from northern Africa in return for aid.LUDOVIC MARIN/AFP/Getty Images

Since the 2015 refugee and migrant crisis, there has been pressure on the European Commission and the most affected European Union member states to find ways to effectively manage (and deter) migration. Aid is increasingly seen by E.U. policymakers as an essential part of a long-term strategy to tackle migration’s “root causes” – through the creation of jobs, quality education and better public services. As a result, pledges to scale up aid to developing countries are routinely accompanied by statements that development gives would-be migrants an incentive to stay home. ­­

In the past, donor nations generally responded to refugee movements by providing humanitarian assistance. More recently, the focus has shifted toward long-term development aid, which donors hope will ultimately reduce incentives for emigration. This is exemplified by recent E.U. agreements with Lebanon, Jordan and Turkey, the main countries of first asylum for Syrian refugees. Our research shows that donors have not only changed their rhetoric, but also their behavior: Since the early 2000s, higher numbers of internally displaced persons (IDPs), as well as refugees in countries of first asylum, have led to higher allocations of long-term development aid.

But the impact of aid on migration is much less clear-cut than E.U. policymakers would like to believe. Rather, as we argue in a recent paper, the aid-migration relationship depends on the channels through which aid gets distributed – that is, whether it goes to the individual or the society. Broadly speaking, so long as it is not completely wasted, foreign aid can either raise individual incomes or improve other dimensions of well-being such as public services – or both at the same time. Previous research has shown that the likelihood of emigration falls with improved quality of local amenities such as health facilities, schools and other institutions. Development aid might therefore reduce emigration from poorer countries through improved provision of public services.

But when aid to developing nations primarily raises incomes – for example, when it gets funneled into job-creation programs – migration can be expected to increase because more people can afford the costs of migrating. Only at much higher development levels do rising incomes provide an incentive to stay home; the potential income gains to be achieved abroad narrow, while additional income is no longer required to finance the cost of migration. Studies show that the average would-be migrant has an incentive to stay at home if his or her country’s income per capita reaches $8,000–$10,000. Income levels in the vast majority of aid-receiving countries rarely clear that threshold – that’s why modest increases in income are likely to keep prompting people to migrate. In a Refugees Deeply op-ed, Michael Clemens refers to this reasoning when arguing that aid-induced development provides those who want to migrate with the necessary means.

Given that the effects of development aid on migration differ depending on whether aid improves individuals’ incomes or public services, our research explores the relevance of these two channels. We distinguish between early-impact and late-impact aid. Early-impact aid may lead to higher individual incomes in the short to medium term – say, after two to three years. It includes, for example, support for agriculture (improved seeds, fertilizer and so on) and employment. Late-impact aid affects the provision of public services, but may lead to higher personal incomes only in the very long run – say, after 10 years. Support for social infrastructure (schools, clinics and so on) is one example of late-impact aid.

Using a sample of 25 donor and 129 recipient countries over the period from 2004 to 2014, and controlling for a number of other determinants of migration choices, we find that a rise in late-impact aid – which brings more effective public services and governance – is associated with falling emigration rates (though the effect is minimal). This is in line with expectations and similar to what Jonas Gamso and Farhod Yuldashev wrote in another Refugees Deeply op-ed, namely that aid for governance has a deterrent effect on migration. Yet our conclusion is much more general: The association between late-impact aid and reduced migration rates applies to a wide range of service improvements, from better schools to cleaner air and more reliable state institutions. In quantitative terms, the effect is small but still non-negligible: A 10 percent increase in late-impact aid would on average lower the emigration rate by 1–1.5 percent.

Our findings therefore support E.U. policymakers’ approach regarding development aid as an appropriate instrument to reduce migration. But they may want to lower their expectations. It would take an unrealistic increase in development aid to deliver the reduced rates of migration they likely have in mind. According to our estimates, a doubling of late-impact aid would still only lower emigration rates from sending countries by a fairly modest 10–15 percent.

Moreover, the primary objective of aid should be to foster development in recipient countries. If income-generating projects such as providing improved seeds to farmers are a priority from a development perspective, it is hard to argue that they should not be realized because a small fraction of the beneficiaries might emigrate eventually. This leaves ample room for spending aid on projects that make sense from a developmental point of view and at the same time (modestly) deter migration.

 

The views expressed in this article belong to the authors and do not necessarily reflect the editorial policy of Refugees Deeply.

Mauro Lanati and Rainer Thiele are both part of the Mercator Dialogue on Asylum and Migration (MEDAM), a European research and consultation project that identifies and closes gaps in existing research and develops specific policy recommendations on asylum and migration.

Suggest your story or issue.

Send

Share Your Story.

Have a story idea? Interested in adding your voice to our growing community?

Learn more
× Dismiss
We have updated our Privacy Policy with a few important changes specific to General Data Protection Regulations (GDPR) and our use of cookies. If you continue to use this site, you consent to our use of cookies. Read our full Privacy Policy here.