Emigration And Economic Development

The Case Of The Yemen Arab Republic

Jon C. Swanson

• Publisher: Routledge
• Year: 2019
• ISBN:
  9780429728044
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Although social scientists tend to agree that emigration improves the standard of living of migrants and their families, research suggests that more generally it has a neutral or even negative effect on economic development in the home country. The Yemen Arab Republic is a case in point: while living standards there have improved with emigration, t

1. Introduction and Survey of Literature

Because Americans believe the cliche that theirs is the "land of opportunity," they take it for granted that the "tired and worn" immigrant arrives on these shores with the intention of settling down and "starting a new life." The final destination of the migrant is perceived as his ultimate goal, while his homeland, "the old country," is viewed at best as secondary to his American experience.

Such a view is no doubt accurate for some migrants but is totally incorrect for others who see the United States as a means rather than an end. These people, too, may come to the United States in search of a better life, but a better life in their homeland, not in the United States. For them the United States is useful in providing jobs which will allow them to pay off debts, build homes, marry, buy land, or start businesses in the "old country," but it is not a place to settle permanently. Migration is perceived as a transitory episode in their lives, a step towards success back home as measured by the standards of that country.

This is not to say that many such individuals do not in the end remain in the society to which they migrate. What is more important, however, especially from the standpoint of the sending society, is that they believe that they will return and as a group nurture an ideology to that effect. As a consequence, they continue to invest their money, hopes, and dreams in their homelands in spite of what may be intervals abroad lasting years.

One group of migrants who follow this pattern is the Yemenis of Southwest Arabia. As emigrants to Britain, the United States, Saudi Arabia, the Arab Gulf, and elsewhere, Yemenis regularly remit millions of dollars and make frequent trips back home. Modern emigration from this area probably dates from shortly after the establishment of the British colony at Aden in 1839, when Yemeni tribesmen began to make their way down to the port to find work as stevedores and sailors. Aden, and later the French port of Djibouti, just across the Arabian Sea on the Somali coast, became jumping off places for Yemeni emigrants who eventually established colonies throughout the British and French empires as well as in the United States. With the development of the oil fields around the Arab Gulf, however, migration has been directed to countries somewhat closer to home both geographically and culturally. This recent migration is truly fantastic in its proportions. Yemenis have been leaving their country by the tens of thousands in order to cash in on the high wages being paid for day labor in Saudi Arabia and the Gulf states.

For the most part these migrants are adult males, what Watson (1975:7-8) after Lee calls "sojourners," men who spend a major part of their lives abroad but maintain their orientation toward their home country, to which they ultimately expect to return. This ideology of return precludes the formation of permanent ties in the receiving society, but at the same time insures a substantial flow of cash remittances back to Yemen.

Based on 19 months of fieldwork (see appendix) in the Yemen Arab Republic carried out during 1973 and 1974, the following pages will explore the consequences of massive labor export from rural Yemen. More specifically it will focus on three different emigrant villages in the highlands and will show how ecological differences, together with material conditions arising from the international labor and commodities markets, are influencing development and underdevelopment in Yemen. Before discussing Yemen per se, however, it will be necessary to evaluate prior research into the consequences of emigration on sending societies.

The economic impact of labor export and its potential for stimulating long-term economic development in poorer nations have been examined both theoretically and empirically. On the one hand theoreticians, mostly economists, have attempted to construct models which predict how economies will react when emigration takes place and evaluate whether such an exodus will have positive or negative implications for long-term economic development. On the other hand, economists, sociologists, geographers, and anthropologists have examined a variety of countries, localities, and villages in an effort to assess empirically the consequences of labor export.

Theoretical Studies

Theoretical and general reviews of the economic consequences of emigration for the sending society usually recognize one or more of the following as key variables: (1) manpower loss, (2) repatriated earnings (remittances), (3) repatriated skills, and (4) repatriated ideas. These factors are then considered with respect to a host of other variables such as quality of the labor force, productivity, balance of payments, and the like. The number of variables considered and the quality and complexity of analyses vary widely in such studies as do opinions about the relative benefits of emigration for the home economy.

One recent writer who is optimistic about the role of emigration in national economies is Ian Hume (1973:2-6), who believes that "the massive movement of manpower involved in migration in Europe since World War II has benefited both countries sending labor and those receiving it." The principal benefits enjoyed by the sending societies are reduction in un- or underemployment and an improved balance of payments. Michapoulos (1968) looks on emigration in a similarly favorable light contending that insofar as emigration reduces unemployment and increases per capita income its effects are positive. Both of these studies are somewhat limited in their consideration of relevant variables and neither discusses the long-term implications of emigration for economic development.

A much more detailed treatment of emigration is provided by Friedlander (1965) in the theoretical section of his book Labor, Migration, and Economic Growth, which deals with Puerto Rico. Friedlander stresses that emigration cannot only provide positive benefits but can also stimulate economic growth, especially when it is coupled with large scale foreign investment. Emigration, he says, offers a means of breaking out of the "low level income trap" first described by Leibstein (1957) and Nelson (1956) in which "rapid population growth prevents increases in the growth of output resulting in a stagnating economy at a low level subsistence per capita income" (p. 11). Aside from arguing that unskilled workers sent abroad will return home with useable skills, Friedlander pays little attention to the feedback effects of emigration and presents us with a basically statistical model in which unskilled workers are removed from the economy while production levels remain stable. As a consequence, per capita productivity and income accelerate comfortably ahead of population growth. He concludes (p. 33):

In summary, the migration of unskilled, rural and unemployed workers will have a positive effect on the growth of output. Improved capital labor ratios, reduced unemployment, increased savings, improved quality of the labor force, reduction of government expenditures on social overhead projects and welfare benefits, and lower capital output ratios, and higher land-labor ratios - all are results of emigration, either directly or indirectly. The total effect causes an accelerated growth of output during the time of large scale emigration. Thus, output growth increases rapidly, population growth decreases rapidly, and the rate of growth of income per capita is accelerated significantly.

Thus, Friedlander argues that emigration may significantly alter the underdeveloped situation of a poor, underdeveloped and overpopulated country. What he seems to lose sight of in his discussion is the second factor in his own formula, namely, large-scale foreign investment. Such investment may have been available to Puerto Rico in the 1940s and 50s; it is doubtful if it has been available to many other emigrant countries (Jamaica is a possible exception), and questionable whether emigration alone can generate sufficient quantities of capital to stimulate development.

It is mainly because of such doubts that Castles and Kosack (1973:412) take a pessimistic view of the effects of emigration on the sending society: "Emigration," they wrote, "is not likely to have an important effect in countries where population size or rate of increase is really a problem like India, Algeria, or Turkey." In their view emigration may reduce unemployment in some cases but joblessness is so great in most of the poorer countries of the world that it will be unlikely to have a significant impact. Furthermore, even if labor export did succeed in raising wages locally, demand would intensify so that "the increase could well be swallowed up by inflation in the price of food." Money remitted by workers directly is also felt to be an unlikely source of capital for development, as repatriated earnings are likely as not invested in an improved standard of living or some other marginally productive enterprise such as real estate or services (p. 419). The quality of the labor force is also considered unlikely to be improved by repatriated skills. There are several reasons for this, one of which is that workers simply find no opportunities to learn skills abroad. Furthermore, when skilled workers do return home the skills they have acquired are often unsuitable for the needs of local industry; or wages are so low that they choose to reemigrate. In other cases they choose to resettle in rural areas which offer no market for their skills (p. 416) . Thus Castles and Kosack find little to encourage them in their analysis of the consequences of emigration save perhaps for the improved standard of living enjoyed by the families of emigrants. Even here they have reservations arguing that emigration will simply create a petty elite whose standard of living will adversely effect the already meager resource supply of the poorer segment of the population.

Kindleberger (1967), like Castles and Kosack, doubts if emigration can stimulate economic growth in countries like Turkey where unemployment is massive, although he does feel that out-migration has been a significant factor in the development of some other Mediterranean countries like Greece and Italy where unemployment is of a somewhat lesser magnitude. He cautions, however, that migration on too large a scale may lead to depopulation for, "Bloodletting need not be stimulating. Exodus can lead to collapse and ghost communities" (p. 106). Where emigration does lead to economic growth it is primarily because of reduction in rural unemployment which results in higher wages and lower profits. This in turn forces a rationalization of agriculture including consolidation of holdings and mechanization (p. 103-106) .

The author discusses other factors as well including repatriated earnings and skills but these are not felt to be crucial to the development process. Remittances may ease the balance of payments problem but they are often "invested in ways which contribute very little to economic growth" (p. 94). Nor does he feel that it is likely that much in the way of skills will be repatriated by the returning workers. He notes optimistically that, "It is not only skills that the returning migrants bring back. Changed attitudes toward consumption, work and the possibilities of change can count" (p. 102). Emigration may also contribute to an increased surplus provided production remains stable and consumption does not increase. Kindleberger is skeptical, however, as to whether these gains can generate enough capital for significant economic growth.

One of the most comprehensive analyses of the economic consequences of emigration to date is that of Suzanne Paine (1974). She enumerates eight key factors which determine whether or not migration will generate sustained economic growth. These include (1) relative skill levels of emigrants, (2) applicability of skills learned abroad in the home society, (3) magnitude of emigrant remittances, (4) extent of investment of remitted capital in productive enterprises, (5) extent to which repatriated earnings are spent on imports, (6) effect of remittanaes on local prices, (7) consequences of labor export on trade between host and sending society, and (8) the proportion of migrants who settle abroad permanently. In light of these elements Paine sets forth two hypothetical ideal types, one outlining the optimum conditions for reduced dependence on labor export and economic independence, and a second which describes circumstances encouraging continued economic stagnation.

In the first case only the unskilled would emigrate, consumption foregone¹ in the agricultural sector would be invested so as to increase agricultural productivity and agricultural underemployment would be reduced so that production per capita would increase as well. In industry, migration would not reduce the demand for skilled labor, e.g., through the introduction of machinery. Increased demand created by remittances would be filled by an existing industrial plant or new plants financed with repatriated earnings and such plants would employ repatriated skilled workers. Remittances not used to underwrite new industry employing returned migrants would be used for other developmental projects which would reduce the country's dependence on foreign aid. At the same time migrant workers abroad would increase demand for exports from the sending economy and workers abroad would not work in industries which would compete with those in the homeland. Finally, the absence of inflationary pressures would keep exports in a competitive position and depreciation of the currency would be avoided. She summarizes:

In other words, migration would alleviate unemployment not just temporarily, but also permanently by creating new job opportunities. It would also provide savings, foreign exchange, and trained manpower for economic growth. It might also lead to a reduction in the birthrate, thus permitting higher per capita incomes (p. 47).

On the other hand, emigration might have a neutral or even negative effect on the economy under an opposite set of circumstances where large numbers of skilled workers were recruited abroad so that wages were inflated and managers were discouraged from training new workers and turned instead to machines which would permanently displace workers. Loss of skilled labor would reduce productivity and create bottlenecks at key points in the industrial system. In the agricultural sector emigration would result in increased consumption and a decline in production with no surplus for investment. Repatriated earnings would be spent on imported consumer goods which would lead to inflation or invested in nonproductive enterprises in the service sector of the economy. Workers who had learned skills abroad would find no jobs in local industry or would prefer to avoid wage labor on their return home. Workers abroad would find jobs in industries which competed with those in the sending society and they would prefer foreign goods over domestic goods causing a decline in the export market of the sending society. Inflationary pressures at home would further depress the export market and force devaluation of currency. Expatriate workers would anticipate the decline and withhold earnings abroad until the currency dropped or was forced to drop because of deteriorating exchange balances. In summary:

...emigration would do little to alleviate the unemployment situation provide few, if any, savings for capital formation or trained manpower for new industrial projects. Rather, it would increase inflationary tendencies, tie the country to adopting an exchange rate which reflected the uncompetitiveness of its exports, so increasing the cost of imports required for the establishment of new import substitute industries. This is not to say that the country could not achieve some sustained growth in the accounting sense, but rather that the main source of new growth would be from income earned from exporting labor abroad rather than from production of goods and services at home. In effect the country would become a satellite of the industrial metropolis' prosperity in good years but taking most of the burden of adjustment in bad years (p. 48).

Another study which emphasized that migration may have either favorable or unfavorable consequences for economic development is the work of Miracle and Berry (1970). It differs from most of the previously discussed theoretical studies in that it is more concerned with the local consequences of emigration in rural areas. The authors distinguish two kinds of effects deriving from labor export, those consequent on the migrant's absence and those which depend on his return. In the first case they suggest that labor migration may or may not affect productivity depending on length of absence of the laborer, social division of labor, and/or nature of the growing season. Generally, the longer the absence of the migrant the greater the- adverse effect on productivity (p. 91). Furthermore, productivity may be affected differentially so that livestock productivity may be hurt worse than grain production or vice versa (p. 92). Like Kindleberger they suggest that a reduction in the labor supply may increase wages and stimulate mechanization (p. 95). Turning to the economic consequences of the emigrant's return, returnees are optimistically viewed as important sources of innovative potential and capital. The former will of course depend on the degree of similarity between the migrant's experience in the host and sending society. However, the very experience of emigration is seen as providing some useful experience and at least raise the expectations of the migrants regarding standard of living.

The issue of whether emigration has positive or negative consequences for sending societies has been the subject of a recent debate between W. R. Böhning (1975, 1976) and Keith Griffin (1976) both with the International Labor Office in Geneva. Böhning's article begins by noting that "there is a potentially serious conflict between private gains and social costs (of migration)" (p. 252). He concedes that emigration may relieve unemployment and improve the lot of the emigrant and his family but questions whether its effect on the sending society at large is entirely positive. He suggests that emigration tends to reduce the number of skilled workers in the sending society while those who remain behind may become so dependent on money from abroad that traditional agriculture is pursued with less than the usual vigor. Furthermore, changes which occur in the rural environment, namely mechanization and consolidation of land holdings, may in fact do little to relieve the unemployment problem. Emigrant returnees for their part are more likely to come back preoccupied with consumerism than committed to innovation. The desire for consumer goods tends to eliminate the positive effect of remittances so that "what is brought in with one hand, i.e., hard foreign currency is taken away with the other" (p. 263). The consumer mentality is also likely to induce inflation and at the same time promote further emigration as people seek to satisfy new wants and needs. Thus, a spiraling pattern of out-migration develops which is coupled with ever greater ...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• List of Figures and Maps
• Acknowledgments
• 1 INTRODUCTION AND SURVEY OF LITERATURE
• 2 GEOGRAPHY, CLIMATE, AND RECENT HISTORY
• 3 SUBSISTENCE AGRICULTURE, NUTRITION, AND CASH CROPPING
• 4 HISTORY AND PATTERN OF YEMENI EMIGRATION
• 5 THE ECONOMIC CONSEQUENCES OF EMIGRATION
• 6 SUMMARY, CONCLUSIONS, AND SPECULATIONS
• APPENDIX: THE FIELDWORK EXPERIENCE
• REFERENCES
• INDEX