Economic Development Bulletin No. 25

Voice, Exit, and Liberty: The Effect of Emigration on Origin Country Institutions

Nations with freer economies, the rule of law, and other strong institutions are more prosperous than others.1 Some economists, such as George Borjas of Harvard University, fear that immigrants could bring their bad institutions with them and overwhelm those of the first world, slowing down economic growth in the future.2 Fortunately, there is scant evidence that those who immigrate to the developed world endanger economic freedom there.3 There is even more evidence that emigrants from the developing world do affect the economic, political, and social institutions in their home countries.

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Voice and Exit 

Individuals in nations with poor institutions have two main ways of changing them. The first is through voting or protest, what economist Albert O. Hirschman calls “voice.” The second is to emigrate, the option that Hirschman calls “exit.”4 These options were mutually exclusive prior to the telecommunications technology of the modern era. Now it is possible for emigrants to voice dissent in their home countries directly or to fund and cooperate with domestic opposition groups from the safety of developed nations. In some cases, emigrants even have voting rights in their home country. Here we examine the evidence on how emigrants who exit and use their voice from abroad can influence the quality of political, economic, and social institutions in their origin countries.

Exit 

There are two primary channels through which emigration affects home country institutions. The first channel is by altering public opinion, which is a double-edged sword. If those who favor free-markets and democratic reform emigrate, then that can strengthen the current regime and stall those reforms.5 For instance, in many poor countries the emigration of skilled workers is a significant political issue that can be countered with either reform or repression.6 Fortunately, they mostly choose reform.

Greater exitability can accelerate the convergence of institutions in less developed countries with those of developed nations. There may be a point where the magnitude of mass emigration determines whether it is beneficial or harmful to source country institutions, but the literature does not discuss where this threshold lies. Many countries, such as Mexico and Cape Verde, have experienced emigration rates ranging from 10 to 30 percent of their respective populations with largely positive policy results.7

Mass European emigration during the 1800s spurred institutional reform in Sweden and Ireland. Roughly a quarter of Swedes emigrated –including many would-be reformers. To stem the flow of emigrants, those who stayed behind built reform-minded political parties that took power and reformed the country along classically liberal lines.8 The strongest support for reformist political parties came from areas with the highest rates of emigration.

Mass emigration from Ireland likewise spurred institutional reform.9 Ireland has seen

several waves of mass emigration to England, the United States, and other Anglo nations over the centuries.10 The rate of emigration was sufficiently high so as to raise concern about the future of Ireland as a nation. Political elites responded by attempting to improve social conditions that prompted so much of the emigration, mainly by upholding human rights and staying out of World War II.11

The threat of exit can even work on local governments. It can encourage municipal governments to provide higher-quality public goods at lower costs to avoid losing tax payers to neighboring municipalities within United States.12 A similar institutional competition sometimes occurs across nations for skilled laborers.

The second channel through which emigration can improve institutions is by increasing the political bargaining power of those who remain. Emigration can create a safety valve that decreases the cost of dissent because the dissenter can conceivably leave. This may encourage some autocratic countries, such as the Eastern Bloc during the Cold War, to restrict emigration to increase the cost of dissent.13 East Germany in particular implemented severe emigration restrictions due to the otherwise relative ease of dissidents emigrating to West Germany.14 Immigration restrictions in the developed world can slow the emigration of skilled workers, raising the cost of political dissent in autocratic regimes, and potentially delaying the reform of wealth-producing institutions in the poor nations of the world. Fidel and Raúl Castro’s Cuba is another example of that phenomenon. However, it has occasionally liberalized emigration policies to alleviate domestic political pressures and secure the regime’s stability—most notably during the 1980 Mariel boatlift. That has provided a safety valve that has arguably strengthened the Cuban regime.

Voice after Exit 

Emigrants can directly affect the political institutions in their home country without returning home. For instance, Mexican emigrants to the United States aided in the fall of the Institutional Revolutionary Party (PRI) that controlled Mexican politics for nearly a century.15 Monetary remittances from emigrants decreased the electorate’s reliance on the PRI’s political machine for basic public goods such as roads and schools. This diminished reliance slashed the cost of voting against the PRI. Emigrants also transmitted back values on government transparency, accountability, and other cultural norms.16 This contributed to the historic 2000 election of Vicente Fox, the first non-PRI president in nearly a century.

However, monetary remittances do not have an entirely positive effect. They can increase bribery in the short run, further diminishing the quality of institutions.17 Families and friends who receive monetary remittances have larger disposable incomes that can be captured by corrupt officials. Monetary remittances also decrease the likelihood that recipients will participate in electoral politics, since they now have a revenue source independent of state largesse.18

In the long run, however, monetary remittances tend to have an indirect positive effect on institutions through their interaction with voice. Recipients are less dependent on state-provided public goods such as medicine and schools, allowing them to speak out with less fear of political reprisal.19 Migrants also send money to Hometown Associations (HTA) that provide for local public goods. This simultaneously decreases dependency on state largesse while building civil society and increasing the number of potential political dissidents. Decreased dependency on state resources increases the likelihood that a party-based authoritarian regime will transition toward a democratic regime.20  Emigrant monetary remittances can also fund political opposition groups.21

The positive effects of voice after exit usually depend on emigrants going to nations with high-quality institutions. There is no evidence that emigrants who migrate between authoritarian states promote free-markets or democratic government when they return home. For instance, many Moldovans emigrated to Russia and Western Europe (mainly Italy) after a financial crisis in the late 1990s. Regions of Moldova that saw Moldovans go to Western Europe experienced the greatest drop in political support for the Communist Party in the following decade, while regions that saw Moldovans go to Russia saw support for the Communists build.22 In the Moldovan case, Italy was a better transmitter of liberal values than Russia.

How emigrants voice their dissent can also affect political results. Salvadoran emigrants have generally favored aiding their compatriots back home through HTAs that fund public works and promote economic development.23 Emigrants from the Dominican Republican support voting rights for emigres.24 Because of the way the emigrants behaved, the Salvadorian and Dominican governments viewed them as valued members of trans-border nations. This has allowed the latter groups more freedom in their actions. Voice after exit can improve institutions in origin countries but how the migrants choose to influence their home nations and where they migrate likely affects the end results.25

Voice after Return

Another way that emigrants affect their home country institutions is by raising their voice after they return from living abroad.26 Return migrants often return home with new ideas, often called social remittances, that take the form of higher demand for high-quality political institutions, liberal ideas, and modern norms on everything from fertility to use of technology and how political systems should be run.27 Social remittances can occur from a distance but they are most effective when the migrant returns.

Return migrants to Cape Verde, many of whom worked in the United States and Portugal, demand more liberal political reforms and government transparency than those who never emigrated.28 As a result, today the island nation enjoys strong institutions that have made it an attractive destination for migrants from mainland Africa. Between 2010 and 2013, the only years when scores are available, Cape Verde moved up 33 places in the Economic Freedom of the World index.29 Cape Verde is also regularly at the top of Freedom House’s rankings for sub-Saharan nations30 and has a history of peaceful political transitions after elections.31

Polish migrant workers who returned from the United Kingdom promoted European Union (EU) integration as a means of reforming political institutions.32 That effect was not uniform, however, as other return migrants from within the EU typically do not seek to reform domestic institutions –they favor increased EU integration and the continuation of the free movement zone also known as the Schengen Area.33

Mexican households with return migrants have a higher demand for improved economic and political institutions such as less official religious involvement in civic affairs.34 They are also more likely to support the rights of the LGBT community.35 Same-sex marriage is currently legal in several western and northern Mexicans states, which are also the regions where most Mexican emigrants to the United States originate from.36 Moroccan return migrants from Europe likewise have higher demand for more inclusive political institutions and gender equality, while those who return from other Arab countries are not more classically liberal.37

Emigration abroad does not always lead to different political views upon return. Filipino seasonal workers in Saudi Arabia do not have political views significantly different from similar workers who remained behind.38 For unclear reasons, Filipino return migrants who have resided in Hong Kong and Japan, both regions with strong institutions and high economic freedom, are also not influenced by their work abroad.39 A survey of Mali return migrants found that political voting habits were changed by migration to Europe, but education earned abroad had little effect on political views.40 Foreign students educated in democratic countries tend to promote democracy in their home countries, but this effect disappears if they were educated in nondemocratic countries.41 The introduction to western views on political institutions is more important than the educational characteristics of return migrants.42

Conclusion

Improved institutions can help jump-start economic growth in poor countries. Emigration can improve the quality of political institutions in origin countries through several channels. The first is by encouraging domestic elites to liberalize institutions in order to retain skilled workers. The second is by easing the international flow of ideas through social remittances and direct engagement by return migrants. Westernized migrants can transmit back western institutions, social norms, and sometimes themselves, frequently improving the quality of their home institutions. Institutional convergence is hastened by emigration.

Notes

1. Robert A. Lawson, “Economic Freedom,” The Concise Encyclopedia of Economics, Library of Economics and Liberty,http://www.econlib.org/library/Enc/EconomicFreedom.html?iframe=true&width=100%&height=100%.

2. George Borjas, Immigration Economics (Harvard University Press, 2014), p. 169.

3. On the effect of immigrants on institutions in destination countries, see J. R. Clark, Robert Lawson, Alex Nowrasteh, Benjamin Powell, and Ryan Murphy, “Does Immigration Impact Institutions?” Public Choice 163, no. 3 (April, 2015) and Michael A. Clemens and Lant Pritchett, “The New Economic Case for Migration Restrictions: An Assessment,” IZA Discussion Paper no. 9730 (February 2016).

4. Albert O. Hirschman, Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States, vol. 25 (Harvard University Press, 1970).

5. Colin M. Barry, K. Chad Clay, Michael E. Flynn, and Gregory Robinson, “Freedom of Foreign Movement, Economic Opportunities Abroad, and Protest in Non-Democratic Regimes,” Journal of Peace Research 51, no. 5 (2014): 574–88.

6. Michael Clemens, “Skill Flow: A Fundamental Reconsideration of Skilled-Worker Mobility and Development,” Center for Global Development Working Paper no. 180; Gil S. Epstein, Arye L. Hillman, and Heinrich W. Ursprung, “The King Never Emigrates,” Review of Development Economics 3, no. 2 (1999): 107–121.

7. Frédéric Docquier, B. Lindsay Lowell, and Abdeslam Marfouk, “A Gendered Assessment of Highly Skilled Emigration,” Population and Development Review 35, no. 2 (2009): 313.

8. Mounir Karadja and Erik Prawitz, “Exit, Voice, and Political Change: Evidence from Swedish Mass Migration to the United States” (Institute for International Economic Studies, Stockholm University, 2015).

9. Albert O. Hirschman, “Exit, Voice, and the State,” World Politics 31, no. 1 (1978): 103–104.

10. Ibid.; Enda Delaney, “State, Politics and Demography: The Case of Irish Emigration, 1921–71 1,” Irish Political Studies 13, no. 1 (1998): 25–49.

11. Albert O. Hirschman, “Exit, Voice, and the State,” World Politics 31, no. 1 (1978): 90–107.

12. Fabio Mariani, “Migration as an Antidote to Rent-Seeking?” Journal of Development Economics 84, no. 2 (2007): 609–30; Eliakim Katz and Hillel Rapoport, “On Human Capital Formation with Exit Options,” Journal of Population Economics 18, no. 2 (2005): 267–74; Charles M. Tiebout “A Pure Theory of Local Expenditures,” Journal of Political Economy 64, no. 5 (1956): 416-424.; Fernando Ferreira and Joseph Gyourko, “Do Political Parties Matter? Evidence from US Cities,” Quarterly Journal of Economics 124, no. 1 (2009): 399–422; Ilya Somin, “Tiebout Goes Global: International Migration as a Tool for Voting with Your Feet,” Missouri Law Review 73 (2008): 1247.

13. Irina Ivakhnyuk, The Russian Migration Policy and Its Impact on Human Development: The Historical Perspective (New York: United Nations Development Programme, 2009); Alan Dowty, Closed Borders: The Contemporary Assault on Freedom of Movement (Yale University Press, 1989).

14. Hirschman, “Exit, Voice, and the State.”

15. Tobias Pfutze, “Does Migration Promote Democratization? Evidence from the Mexican Transition,” Journal of Comparative Economics 40, no. 2 (2012): 159–75.

16. For some interesting anecdotes, read William Booth and Nick Miroff, “Returning Migrants Boost Mexico’s Middle Class,” The Washington Post, July 23, 2012; Nathaniel Flannery, “Can Mexico Exploit Its New Demographic Dividend?,” Americas Quarterly, Summer 2014,.

17. Yasser Abdih et al., “Remittances and Institutions: Are Remittances a Curse?” World Development 40, no. 4 (2012): 657–66.

18. Nino Krilova, “Political Effects of Remittances: Political Participation in Developing Countries” (Omaha, Nebraska:Creighton University, 2008).

19. Claire L. Aida and Desha M. Girod, “Do Migrants Improve Their Hometowns? Remittances and Access to Public Services in Mexico, 1995–2000,” Comparative Political Studies44, no. 1 (2010): 3-27.

20. Abel Escribà‐Folch, Covadonga Meseguer, and Joseph Wright, “Remittances and Democratization,” International Studies Quarterly 59, no. 3 (2015): 571-586.

21. Gina Lei Miller and Emily Hencken Ritter, “Emigrants and the Onset of Civil War,” Journal of Peace Research 51, no. 1 (2014): 51-64.

22. Toman Omar Mahmoud, Hillel Rapoport, Andreas Steinmayr, and Christoph Trebesch, “The Effect of Labor Migration on the Diffusion of Democracy: Evidence from a Former Soviet Republic,” IZA Discussion Paper no. 7980 (2014).

23. José Itzigsohn and Daniela Villacrés, “Migrant Political Transnationalism and the Practice of Democracy: Dominican External Voting Rights and Salvadoran Home Town Associations,” Ethnic and Racial Studies 31, no. 4 (2008): 664–86.

24. Ibid.

25. Xiaoyang Li, John McHale, and Zhou Xuan, “Does Brain Drain Lead to Institutional Gain?” SSRN Working Paper 2350203 (2013).

26. Catia Batista and Pedro C. Vicente, “Do Migrants Improve Governance at Home?: Evidence from a Voting Experiment,” World Bank Economic Review 25, no. 1 (2011): 77–104.

27. Peggy Levitt, “Social Remittances: Migration Driven Local-Level Forms of Cultural Diffusion,” International Migration Review 32, no. 4 (1998): 926–48. And Michel Beine, Frédéric Docquier, and Maurice Schiff, “International Migration, Transfer of Norms and Home Country Fertility,”Canadian Journal of Economics/RevueCanadienne D’économique 46, no. 4 (2013): 1406–30; Ajay Agrawal et al., “Brain Drain or Brain Bank? The Impact of Skilled Emigration on Poor-Country Innovation,” Journal of Urban Economics 69, no. 1 (2011): 43–55.

28. Ibid.

29. James Gwartney, Robert Lawson, and Joshua Hall, Economic Freedom of the World: 2015 Annual Report (Vancouver: Fraser Institute, 2015).

30. Ibid.

31. “Opposition Returns to Power in Cape Verde after 15 Years, Ruling Party Peacefully Concede Defeat,” MG Africa, March 21, 2016, http://mgafrica.com/article/2016-03-21-opposition-returns-to-power-in-cape-verde-after-15-years/.

32. Tim Elrick, “The Influence of Migration on Origin Communities: Insights from Polish Migrations to the West,” Europe-Asia Studies 60, no. 9 (2008): 1503–17.

33. Romana Careja and Patrick Emmenegger, “Making Democratic Citizens: The Effects of Migration Experience on Political Attitudes in Central and Eastern Europe,” Comparative Political Studies 45, no. 7 (2012): 875–902.

34. Clarisa Pérez-Armendáriz and David Crow, “Do Migrants Remit Democracy? International Migration, Political,” Comparative Political Studies 43, no. 1 (2010): 119–48.

35. Ibid.

36. “Origins of Mexican Migrants to the United States by Mexican State of Residence, Number, and Share, 2004-2014,” Migrationpolicy.org, February 26, 2015, http://www.migrationpolicy.org/programs/data-hub/charts/origins-mexican-migrants-united-states-mexican-state-residence-number-and.

37. Michele Tuccio, Jackline Wahba, and Bachir Hamdouch, “International Migration: Driver of Political and Social Change?” 2016, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2750277.

38. Stefan Rother, “Changed in Migration? Philippine Return Migrants and (un) Democratic Remittances,” European Journal of East Asian Studies 8, no. 2 (2009): 245–74.

39. Ibid.

40. Lisa Chauvet and Marion Mercier, “Do Return Migrants Transfer Political Norms to Their Origin Country? Evidence from Mali,” Journal of Comparative Economics 42, no. 3 (2014): 630–51.

41. Antonio Spilimbergo, “Democracy and Foreign Education,” American Economic Review 99, no. 1 (2009): 528–43.

42. Careja and Emmenegger, “Making Democratic Citizens: The Effects of Migration Experience on Political Attitudes in Central and Eastern Europe.”

Michelangelo Landgrave is a doctoral student in political science at the University of California, Riverside. Alex Nowrasteh is the immigration policy analyst at the Cato Institute’s Center for Global Liberty and Prosperity.