Economic Infrastructure and Services

I will discuss Economic and Production Aid together. This is often done when analyzing aid data because these two categories of aid are usually given to well-governed origin countries (Akramov 2012). In the first period, both Economic and Production sector aid show a negative relationship with migrant stock. A one percent increase in Economic or Production aid, on average, all else held constant, will yield an approximately 0.04 percent decrease in migrant stock. The subcategories in period one loosely affirm this effect as both Transport and Communications and Agriculture, Forestry and Fishery aid show a negative relationship with coefficients of 0.012 and 0.038 respectively. These results are in line with the majority of empirical work that determine that economic opportunity is a large driver of migration (World Bank). Opportunity of more economic activity in origin countries may change individuals’ inclinations to migration.

In period 2, both Economic and Production Sector aid are not statistically significant. The majority of sub-categories with the exception of agriculture, forestry and mining aid shows no statistically significance. Agriculture, forestry and mining aid depicts an opposite relationship than expressed in period 1. As this aid type increases by one percent, my model estimates that migrant stock in destination countries increases 0.012 percent, holding all else constant. This estimate of a positive relationship between migrant stock shows an alternative hypothesis. Instead of a decrease in migration when economic opportunities are better at home, individuals may choose to migrate due to a relative decrease in migration cost to find better wages elsewhere. This scenario is what the majority of economists agree with, including Clemens and Postel.

Lanati and Thiele use a similar three stage least squares model as Barthelemy et al. in 2009, but use migrant flow as the dependent variable instead. They find a general negative relationship between emigration rates and each type of aid: Social, Economic and Production with coefficients of -0.119, -0.046, -0.065 respectively. This is not exactly an apples to apples comparison, but the differences estimate the relationship between aid and migration. In my analysis, Economic and Production aid also exhibit a negative relationship with migration, however Social aid’s impact is not statistically significant in both periods. In the subcategories of each category, the negative relationship is clearer, as discussed above. The amount of variability explained in their model is very close to mine, at around 90 percent of variability explained. They use residuals squared (r-squared) values to describe the variability explained, while I use deviance squared (d-squared), but the interpretations are the same.