Also, in considerations of the development implications of international migration, the substantial movements within the global South are often either understated or ignored. About half of the global stock of migrants from developing countries are living in other developing countries (United Nations 2013a, 2013b; Ratha and Shaw 2007; Bakewell 2009; and World Bank 2015a). Wage differentials across regions within the global South suggest non-trivial potential gains from further South-South migration. Given the considerable variety of demographic dynamics and labor productivity levels across developing regions, there is considerable scope for mutual gains from further South-South migration. Indeed, Artuc et al. (2015) find that non-OECD destinations account for a third of skilled-migration while OECD destinations are becoming relatively less popular as destinations, based on bilateral migrant stock data from 1990 and 2000.

This paper thus re-examines two issues related to the development implications of higher future migration flows that have not been raised in current policy discussions and literature.<sup>5</sup> First is the issue of how the economic costs and benefits of greater migration change over time. Much of the scenario analysis literature has ignored how the impact on a migrant receiving or sending country is dynamic, and this paper will provide a more nuanced perspective on this. In particular, it will examine the evolution of relative factor prices (wages and the return to capital) in response to migration in both regions, and how this dynamic change affects economic consequences of migration over time. Second is the issue of the significance of South-South migration for development, which has yet to be addressed in scenario analyses of global migration.<sup>6</sup> Using a consistent methodology that is ideal for both issues, this paper will provide a sense of the magnitude of the impact of current South-South migration trends on future growth through the a simple negative experiment or stress test – what are the economic consequences if there was some substantially lower South-South migration relative to the baseline scenario.

The following section describes the global dynamic economic simulation framework used to examine these two issues. Sections 3 considers the implications of greater South-North migration while Section 4 identifies the contribution of current South-South migration trends in a baseline scenario. Section 5 provides concluding comments and discusses some limitations of the approach.

# **2. Analytical Framework**

Estimates from several studies suggest that the global welfare gains from higher migration flows from South to North migration are potentially substantial in the long run (e.g. Borgy et al. 2010; Tyers and Shi 2007; Docquier, Machado and Sekkat 2015, _inter alia_ ). Many of the studies leverage the same economic intuition pioneered in the back-of-the-envelope estimates of Rodrik (2004) and Winters (2001), where the gains arise from workers moving from lower-productivity excess laborsurplus countries to higher-productivity excess labor demand countries. For example, Winters

> 5 Clemens, Ozden, and Rapoport (2015) provides a detailed discussion of how migration and development have evolved more generally in response to improvements in data. 6 There are few exceptions, such as Walmsley, Aguiar, and Ahmed (2015) which focuses on liberalization among middle-income countries in East Asia and the Pacific. These studies, however, are not global in scope.

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