Issue 3, 2017. June-July

   

CAN EMIGRATION BOOST DEVELOPMENT?

Recent empirical findings in Georgia

A CRRC-Georgia contribution

Despite a lack of reliable statistical data, we do know that labor emigration was an important coping strategy for the population of Georgia throughout the 1990s and 2000s, and it still plays an important role for the well-being of many families. But what do we know about the impact of emigration more generally? Is there solid and empirically sound evidence about how emigration is affecting the country's development? While helping families survive, are emigration and remittances eventually leading to economic growth, or is emigration leading to brain drain, or even depopulation? The OECD Development Centre's recent global project aims to answer these questions for ten very different countries worldwide, including Georgia.

The OECD/CRRC-Georgia's report on Interrelations between Public Policies, Migration and Development in Georgia (IPPMD), which launched in March and can be found at https://www.oecd.org/publications/interrelations-between-public-policy-migration-and-development-in-georgia-9789264272217-en.htm, investigates the development potential of emigration and return migration, and is based on solid empirical data collected in 2014. The survey findings, from households with and without emigrants, show that emigrants from Georgia are, on average, younger compared to the household members remaining in Georgia, at 42 and 47 years old, respectively. As expected, 80% of these emigrants have left to work.

Over time, there has been an impressive increase in the amount of remittances from emigrants from Georgia. Although exact figures are nowhere to be found, existing estimates suggest that the value of remittances increased from approximately USD 300 million in 2004 to approximately USD 2 billion in 2014. According to CRRC's 2015 Caucasus Barometer survey, which can be found at http://www.caucasusbarometer.org/en/cb2015ge/INCSOUAB/, 16% of households named money received from relatives living abroad as a source of household income. However, it is well known that this money is spent almost exclusively on consumption, including spending on real estate (e.g., purchasing or renovating household dwellings), with a smaller share allocated for the medical and educational expenses of household members. Remittances are extremely rarely put to use in productive investments, e.g. starting businesses. Thus, their development potential has yet to be realized.

To increase the development potential of monetary remittances, the Government of Georgia should develop targeted policies. The OECD/CRRC-Georgia's report (a link to which is found above) provides some recommendations in this respect.

According to the IPPMD survey findings, households in urban settlements that report receiving remittances are more likely to have a bank account than those households receiving remittances that are located in rural settlements.. This finding logically calls for further development of the banking sector in rural settlements. Although the development of and access to money transfer channels have been rather impressive for both emigrants from Georgia and their household members, these channels can still be improved by making them faster and cheaper.

Business and entrepreneurial education has always been lacking in Georgia, which obviously plays a role in hindering the development potential of remittances. For remittance receivers, educational programs, including short-term training, could prove important to demonstrate how remittances can be used in a productive way, further argues the OECD/CRRC-Georgia report. According to the IPPMD survey findings, members of only 1% of the households participated in a financial training program in the last five years, far too small a share. Importantly, financial education will be beneficial not only from the point of view of how remittances are used, but more broadly.

It is not only money that current emigrants, as well as returnees, send and bring back to Georgia, and non-monetary remittances should also be considered. Experience, knowledge, exposure to different values and know-how can be a significant push for development, both personal and a country's. Although it would be rather impossible to quantify these non-monetary contributions, it is obvious that they, too, provide a resource for further development.

Despite a number of recent research projects on various aspects of migration in Georgia, including the IPPMD project, there are still many migration-related topics to be studied further. It is crucial that such projects continue, and that the Government of Georgia bases its migration policy on regular and reliable empirical evidence.