The World Bank said on Wednesday that this year's performance reflects "a 6.6 percent growth in Pakistan." In India, growth rate was recorded at 7 percent. "This strong growth can be attributed to increased consumption, investment, exports and industrial production in both countries."
The latest World Bank report said, while the October 2005 earthquake in Pakistan had catastrophic human consequences, "its overall economic impact is expected to be smaller."
GDP growth in South Asia is estimated at 6.9 percent in 2005, up from 6.8 in 2004. For 2006, regional gross domestic product is expected to slow to 6.4 percent.
The WB report says, the recent strong economic performance of developing countries suggests that reforms undertaken over the past decades have had a positive impact on growth trends.
"Long-term growth in South Asia is forecasted to average around 5.5 percent during 2007-2015, reflecting a rising contribution to growth from the private sector. Trade reforms, banking-sector liberalisation and re-regulation, privatisation, and infrastructure development are all expected to improve the investment climate, productivity growth, and ultimately incomes." It adds that migration "offers potentially huge economic gains."
Turning to the main theme of this year's GEP, remittances and migration, the report presents evidence that an increase in migrants that would raise the workforce in high-income countries by three percent by 2025 could increase global real income by 0.6 percent, or $356 billion. Such an increase in migrant stock would be in line with the migration trend observed during the past three decades.
"The relative gains are much higher for developing-country households than rich-country households, rivalling potential gains from global reform of merchandise trade," the authors conclude, with $162 billion going to new migrants, $143 billion to people living in developing countries, and $51 billion to people living in high-income countries.
To achieve these gains, the GEP proposes that developing countries seek agreements with countries to which their nationals migrate, to improve the conditions under which they cross borders, seek and maintain employment, and send a part of their earnings home."
"Consistent with the recent report of the Global Commission on International Migration, which urges that the role of migrants in promoting economic growth, development and poverty reduction "be recognised and reinforced," the GEP also notes that remittances and migration should be seen as a complement to local development efforts in low-income countries.
"Migration," the GEP says, "should not be viewed as a substitute for economic development in the origin country as ultimately, development depends on sound domestic economic policies."
The GEP also cites the need for developing countries faced with a large exodus of skilled workers and university graduates (the so-called "brain drain") to improve working conditions in public employment, invest more in research and development, and help identify job opportunities at home for returning migrants with advanced education.
"Managed migration programmes, including temporary work visas for low-skilled migrants in industrial countries, could help alleviate problems associated with a large stock of irregular migrants, and allow increased movement of temporary workers," said Uri Dadush, Director of the Bank's Development Prospects Group, which produces the GEP.
"This would contribute to significant reductions in poverty in migrant sending countries, among the migrants themselves, their families and, as remittances increase, in the broader community."
Remittances reach $232 billion: Officially recorded remittances world-wide are estimated to exceed $232 billion in 2005. Of this, developing countries are expected to receive $167 billion, more than twice the level of development aid from all sources. The GEP authors suggest that remittances sent through informal channels could add at least 50 percent to the official estimate, making remittances the largest source of external capital in many developing countries.
The South Asia region will receive an estimated $32 billion in remittances in 2005, a 67 percent increase from 2001. With recorded inflows of $21.7 billion in 2004, India received the most in remittances in the world, followed by China and Mexico at $21.3 billion and $18.1 billion, respectively."
"Of other South Asian countries, Pakistan received $3.9 billion and Bangladesh $3.4 billion."
Meanwhile, in Sri Lanka, remittance receipts are larger than tea exports, and in Nepal, remittances account for nearly 12 percent of GDP. Despite the emphasis on remittances from developed countries, remittances sent from developing countries-the so-called "South-South flows"-represent 30-45 percent of total remittances. In South Asia, most migrants move to another developing country.
"Migration is truly a global phenomenon," said Dilip Ratha, one of the co-authors of the report. "Many countries, both developed and developing, send and receive migrants, and both send and receive remittances."
Analysis of household surveys indicates that remittances have been associated with significant declines in poverty (headcounts) in several low-income countries, including Uganda (11 percent), Bangladesh (six percent) and Ghana (five percent).
In addition, remittances appear to help households maintain their consumption levels through economic shocks and adversity. They are also associated with increased household investments in education and health, as well as increased entrepreneurship.
These conclusions are borne out by findings of a recent World Bank research study, International Migration, Remittances and the Brain Drain, co-edited by Caglar Ozden and Maurice Schiff.
But the fees charged by remittance service providers are often as high as 10-15 percent for small transfers typically made by poor migrants. The GEP has urged action to reduce these fees, which are often much higher than the actual cost of carrying out the transactions. The report says increased competition in the remittance transfer market would result in lower fees, thereby increasing the disposable income of poor migrants, as well as their incentives to send more money home.
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