Migrating From a Developing Economy

1c) Comment on the extent to which workers migrating from a developing economy may be problematic to future growth and development (10) This question was done very well on the whole. 8/10. A few things to consider: Need definitions. Must define growth, development and migration in a developing economy. These should be prioritized over the conclusion. Don't need long conclusions. 1-2 sentences max. Most were stuck at 8/10 because either one of the L3s or L4s were not developed enough. See the 'few nice points' section below. Must also link these EXPLICITLY to both growth AND development. Common issues: 'Remittances lead to a higher MPS and therefore reduce the savings gap'. Increased savings reduces the savings gap. A higher marginal propensity to save just means people may save more of their income; it doesn't mean that they do. You must say SAVINGS increase. 'Families know best where to spend their remittances unlike the government' This needs expansion and explicit link to development or growth. I.e. The receiving families know best where to spend the remittances they receive. This contrasts to the government which may suffer an information failure. The recipients may be able to spend it on healthcare for their family OR on the Investment in a new business etc...... By contrast, gov may spend tax revenue on a school when an existing family may have no remaining children. A few nice Points L3: a) Migration lowers LRAS. Lower factor of production and potential lower quality of labour. Therefore lower LR growth. Potentially lower AD if less consumption. Fall in RGDP from Y1 to Y2 (REFER TO DIAGRAM). Therefore lower SR growth. If less growth, may be a fall in employment (as lab is a derived demand). This could lead to lower standard of living and hence development. b) Migration often results in 'brain drain' of the best skilled. These have the highest MRP and may further reduce human capital as LRAS reduces because the qual of lab falls. Additionally, many doctors and teachers may leave. US has more doctors from Zambia then there are there. Can directly impact development as could lead to lower literacy rates or lower life expectancy (both components of the HDI). c) Migration may lower taxation revenue. Smaller population may mean less revenue from income tax, VAT etc. This could lead to lower government spending on infrastructure and/or education/healthcare. This could lead to lower development (as before). Plus with PPD effecting many LEDCs, diversification could be necessary for development and hence spending on subsidies for 'infant industries' could be vital. d) Remittances received could lead to enhanced inequality. Often migrants are from wealthy families which could afford to send children to a good school etc. It is these that immigrate and are able to achieve jobs abroad. This could mean that remittances create inequality and so worsen development. (Depict Lorenz Curve increasing). L4: Remittances: Migrants send remittances back. Positive effects: Development of each could count as 14b2. Recipients could spend on development, e.g., send children to school. Could raise wages for future children and lead to sustainable development. Recipients may increase consumption, boosting AD and RGDP. Recipients may have higher income and save more. Savings may increase and offset low savings in developing economies. Offer a platform for long-run growth. Migration: May lead to higher wages. Leads to a fall in supply of labor. Leads to higher wages. May result in higher living standards for those left behind. Migration from a Developing Country: Is when workers leave the country of origin and move to a developed country. Leads to a fall in wages and capital flight. Leads to depopulation. Has long-term problems for the LEDC. The most highly skilled workers will leave. Leads to a brain drain. The labor force will be severely worse off. Leads to a fall in production and real GDP. Inflation may also rise.