The Macroeconomics of Out‐migration: The Ethiopian Case

In the last few years, tens of thousands of Ethiopians have been observed leaving their country of origin (both illegally and otherwise) to seek work and, to a lesser extent, avoid political persecution. A majority of these out-migrants go to the Middle East where they face widespread exploitation and violations of their economic and social rights. Both anecdotal evidence and practices of the Government of Ethiopia (GoE) strongly indicate that exporting people is viewed as the country’s most important export with the concomitant remittances being used as major sources of foreign exchange earnings and as development strategies. It is for this main reason why three ministries, that is, the Ministry of Foreign Affairs, the Ministry of Civil Service and the Ministry of Labor and Social Affairs (formerly the Ministry of Capacity Building) have been deeply involved in diaspora affairs, the latter specifically focusing on exporting of people to the Middle East. In addition, the Ministry of Labor and Social Affairs is known to be primarily tasked with exporting of Ethiopian citizens to the Middle East. In addition to these ministries, government institutions such as the Commercial Bank of Ethiopia, in collaboration with the Ministry of Foreign Affairs are known to be deeply involved in attracting members of the Ethiopian diaspora abroad. The policy is known to allow some diaspora members hold foreign currency accounts at the Commercial Bank of Ethiopia. The state-led strategies designed to enhance and capitalize upon these human and financial flows have been articulated by the late Prime Minister Melees Zenawi and the one-time state minister for Works and Urban Development, Mr. Arkebe Oqubay Mitiku. According to the two leading government officials, one of the three top reasons for the 2010 devaluation of the birr by 20% included providing “more incentives to Ethiopians abroad who send remittances.” In fact, the GoE has been promoting and facilitating emigration thereby placing huge (undue) importance to outmigration and remittances, while at the same time neglecting the enormous human, social and economic costs of outmigration. By encouraging and facilitating emigration, the GoE seems to link remittance flows with development and/or labor migration and poverty alleviation. It appears that the Ethiopian authorities have made their own judgments, a priori, as if emigration would provide sustainable benefits to the national economy. Such policy decisions would have been based on in depth analyses of the issue, with the analyses in turn being based on systematic analyses of available data and information about out-migrants, including the welfare of out-migrants. In fact, both concerned citizens and researchers have been observed complaining about the regime’s unwillingness to allow the aforementioned individuals and groups collect data and information so that they would be able to ascertain the extent, causes and consequences of outmigration and the welfare of emigrants, one of the secretive nature of the GoE, they claim. Repeated observations also indicate that the Ethiopian authorities have decided to make the exportation of Ethiopian citizens and their concomitant remittances as one of their goals. Thanks to this policy shifts, exodus and outmigration have turned to be part of a glorified culture as observed in this popular drama (in Amharic) produced in the country, in which staying put and returning from outmigration are considered a curse while striving to permanently leave the country is applauded and considered a blessing. The purpose of this paper is to explore the macroeconomic effects of exporting people and the concomitant remittances as a development strategy, using Ethiopia as a case study. By exploring the pros and cons of remittances and emigration in the Ethiopian context, this paper shows, inter alia, that outmigration is not always a good phenomenon as some of the members of the ruling party seem to be highly enthusiastic about and that outmigration could both be a result of economic failure as well as a cause for long-term negative economic consequences.