Migration and Economic Development

This study estimates savings and investment functions of migrants from Pakistan who went abroad for employment. Particular emphasis is placed on investigating the impact of remittances on capital formation and on analysing how earnings from abroad can be directed into productive investments creating employment in Pakistan. Evidence from a two-year empirical research in the main migration areas of Pakistan suggests that remittances, in contrast to the common notion, are an important source of financing investments, particularly in agriculture. The acquisition of skills has a strong positive impact on the investment activities undertaken by migrant households. However, the number of migrants who have acquired additional skills during their overseas assignments is relatively low. Simultaneously, migrants who went abroad to countries other than Middle East countries, show a higher propensity to invest than those who worked in the oil exporting countries. Finally, a relatively large number of investments undertaken by migrants is characterised by low profitability expressed in the return on investment. The author concludes that the establishment of so-called »workers' companies» based on examples from Turkey might be a profitable alternative to investments undertaken by the migrants themselves. Lastly, strengthening the rural financial system is seen as a necessity in order to increase the average savings ratio of the rural population by introducing financial innovations.

Autorentext

The Author: Christof Batzlen, born in Reutlingen, 1964, studied agricultural economics at the University of Hohenheim, with specialisation in development economics and policy. After employment at Kreditanstalt für Wiederaufbau, he carried out empirical research in Pakistan funded by DFG and GTZ. Within this research project he organised the Regional Workshop 'Return Migration and Economic Development' in Islamabad in 1997. Since 1998, he is employed in the Africa Department of GFA-Agrar, a German consulting company working in developing countries. Presently, he is adviser on the 'Lower Usuthu Smallholder Irrigation Project' in the Ministry of Economic Planning & Development in Swaziland, funded by the European Union.

Inhalt
Contents: Definitions and data problems Migration and return migration in the case of Pakistan: review of literature Theory, methodology and approach Skill acquisition and utilisation of these skill in migrants' households Scope and determinants of remittances Savings in migrants' households Investment in migrants' households Strategies for stimulating economic growth and employment.