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Development Aid May Not Deter Migration, But Governance Aid Will

The popular idea that development aid can curb migration has come under fire from economists. But researchers Jonas Gamso and Farhod Yuldashev found that one type of aid does have a deterring effect on migration – aid directed toward government and civil society.

Written by Jonas Gamso, Farhod Yuldashev Published on Read time Approx. 4 minutes
A security guard stands in front of an IOM reception and transit center for migrants where German Chancellor Merkel is visiting in Niamey, Niger, October 10, 2016. Michael Kappeler/picture-alliance/dpa/AP Images

Western governments are increasingly turning to foreign aid as a solution to migrant and refugee crises, reasoning that aid will alleviate the poverty and underdevelopment that compels people to migrate.

This strategy is evident in the European Commission’s Migration Partnership Framework tackling “root causes” of migration from the Middle East and Africa and the U.S. government’s connection between $1bn aid to Central America and efforts to lower migration from the region.

While this approach is enticing for its simplicity and intuitiveness, it has come under fire.

Foreign aid itself is highly controversial among economists. It is not a given that aid produces economic development. Even if it does, critics argue that the result will not be a reduction in migration. Instead, they say, aid-induced development will enable those who wish to migrate but lack the means, as Michael Clemens argued in a recent Refugees Deeply op-ed.

These are powerful arguments that call into question the all-too-simple causal chain whereby aid creates development and, in turn, reduces migration outflows. However, among critics of aid-based migration policy there exists an unfortunate tendency to treat all aid uniformly.

We have also investigated the relationship between aid and migration, and in contrast to Clemens and other scholars who share his skepticism, our research demonstrates that some forms of aid can reduce migration.

Foreign aid encompasses a large array of aid projects, ranging from humanitarian aid to general budgetary support, to aid in support of environmental protection. While scholars have traditionally analyzed aggregate variables that lump all of these aid projects into a single measure, recent work by researchers at the College of William and Mary has disaggregated aid data, thereby facilitating more nuanced analysis of subgroups of aid. Researchers are now using this data to better understand the effects of different types of aid.

We have found that aid targeting governance, as opposed to aid promoting economic development, does reduce emigration.

Governance aid, which constitutes about 10 percent of total aid, refers to aid directed toward government and civil society. The bulk of governance aid (about 63 percent) supports public management and rule of law projects, such as legal and judicial development, public finance management and welfare services. Of the remaining 37 percent, most supports civil society and democracy projects, such as support for NGOs, elections and women’s equality organizations.

This sort of aid is uniquely able to combat key political push factors that encourage emigration, such as corruption and political instability. Our research builds on recent evidence that governance aid does improve political institutions in less-developed countries, including checks on executive power and judicial independence. With this in mind, we hypothesized that governance aid deters emigration.

To test our hypothesis, we analyzed disaggregated aid data for 101 poor and middle income countries over 25 years (1985–2010) and investigated the relationships between emigration rates and inflows of three types of aid: aid targeting economic development, aid targeting governance and aid targeting social development. Emigration rates are measured using estimates from the Institute for Employment Research, based on census data from 20 OECD destination countries.

We found no compelling evidence that aid intended to promote economic or social development affects emigration rates. However, we did find a strong and persistent correlation between governance aid and emigration rates. Specifically, where governance aid is higher, emigration rates are lower. For example, a fivefold increase in governance aid reduces a country’s emigration rate by 0.7 percent, on average, according to our findings.

The graph below provides a snapshot of our results. The blue trend line captures the negative relationship between governance aid and emigration rate (the surrounding gray area signifies 95 percent confidence intervals).

The blue trend line illustrates the average relationship between governance aid (as a share of GDP) and emigration rate (95 percent confidence intervals in gray); independent and control variables are lagged one year; control variables are held at median values. (Jonas Gamso and Farhod Yuldashev)

We utilized a number of statistical techniques to better isolate the relationship between aid and migration. We controlled for other important push factors, such as conflict and economic malaise, and for country- and year-specific effects. Additionally, our results hold when we include controls for region-specific factors, indicating that the results are not affected by the characteristics of a particular region, such as Africa, which constitutes 39 of the 101 countries in our sample.

These findings present an alternative picture of how aid can deter migration, with important implications for researchers and policymakers.

The deterrent effects of aid flow through political channels, not economic ones.

In contrast to the conventional wisdom of economic development as a cure for the root causes of migration, our research suggests that political instability, corruption, repression and under-representation are root causes of emigration and that support for governance is the solution. Critics of aid-based migration policy are overlooking an important mechanism by which aid can mitigate migration, as the deterrent effects of aid flow through political channels, not economic ones.

What does this mean for rich countries considering aid-based solutions to their immigration woes? If our research – which remains ongoing – is correct, then these programs will only deter migration if they strengthen governance.

Of course, governance aid is not a panacea that will work in every country or in every context, nor should policy be made in haste.

For researchers investigating the aid and migration nexus, we recommend three avenues for analysis going forward: investigation of the effects of governance aid on refugee crises; identification of conditioning factors that strengthen or weaken the effects of governance aid on migration and country-specific case studies that better pinpoint causal mechanisms linking aid to migration.

For policymakers, it is imperative that these matters are subject to further investigation before aid-based immigration policy is implemented on a large scale. While our results are a positive first step in identifying the type of aid that deters migration, further work is necessary to better clarify where and why this relationship exists.

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

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