When you hear the phrase “Venezuelan migration crisis”, what images come to your mind?
If you Google that phrase, the photos you’ll see show long lines of people carrying backpacks or dragging suitcases as they try or wait to cross a border; parents carrying small children, heartbreaking hugs, camping, exhausted faces.
LOOK: They evacuate the camp in Ciudad Juárez where Venezuelan migrants had been waiting to cross into the United States.
And it is that the migratory wave of Venezuela is a consequence of a huge economic debacle that between 2013 and 2021 reduced the GDP of that country by more than 75%, causing the departure to date of seven million people, of which about six million are in Latin American and Caribbean countries.
This massive arrival of Venezuelan migrants who in many cases need immediate attention -including the most basic issues such as food, shelter, medicine, education for children- has had a significant impact on the receiving countries, which have had to make a significant effort to welcome to newcomers.
Calculations by the authorities of Colombia, the country that has received the largest number of Venezuelans (some 2.5 million by December 2022), indicated that in 2019 they allocated some US$600 for each migrant. That translates into spent about US$1.3 billion to assist newcomers, equivalent to 0.5% of Colombian GDP.
But there are two good news about it:
All of this, according to a new study by International Monetary Fund economists titled “Regional Spillovers from the Venezuelan Crisis.”
An expense that becomes a contribution
According to the research, spending to meet the needs of Venezuelan migrants ranges between 0.1% and 0.5% of GDP, depending on the country.
It is estimated that between 2020 and 2025 it will remain around 0.4% in the case of Colombia; at 0.25% for Ecuador and Peru; and 01,%, for Chile.
The massive arrival of migrants also has an impact on the local labor market, which is initially mixed.
“As most migrants get a job (even if it doesn’t match their skills), total employment rises and real wages fall. Lower wages discourage some local workers from participating in the labor market, while that overall unemployment rises slightly, as the unemployment rate of migrants exceeds that of local workers,” the report states.
“Despite these effects, global labor income increases in line with the increase in global employment. For companies, lower real wages translate into lower production costs and higher profits,” he adds.
Jaime Guajardo, lead author of the IMF studypoints out that it is difficult to assess the contribution of Venezuelan migration to the GDP of receiving countries so far due to the fact that these effects take time and the limitations in the availability of recent data on the level of employment or the type of employment of migrants, partly due to the pandemic.
Despite this, in the study they made estimates of GDP increases in those countries between 2016 and 2030, taking two different scenarios: one without immigrants and another with them.
To calculate the latter, they assumed as premises that at first most migrants would get unskilled jobs in the informal economy and that in the following years, only a fraction of them would join the formal sector with jobs commensurate with their human capital. thus increasing the productivity of the economy in the medium term.
“Under these estimates, the GDP of Colombia, Chile, Ecuador, and Peru -countries that have received 69% of Venezuelan migrants- would have increased between 1.5% and 2.5% relative to a scenario without migration between 2016 and 2022. And it is expected to increase between 2.5 and 4.5 percent by 2030,” Guajardo told BBC Mundo in an interview via email.
The most favored countries
The IMF study took numerous factors into account in its calculations: from the impact of migratory flows on employment and productivity, through the proportion of migrants of working age and their educational level, to labor market conditions, the weather how long it takes for migrants to get a job there, of what kind and in which sector of the economy.
According to that analysis, the country where Venezuelan migration will have the greatest impact on GDP growth by 2030 will be Peru (4.4%)followed by Colombia (3.7%), Ecuador (3.5%), Chile (2.6%), Panama (1.9%), Dominican Republic (1.1%), Costa Rica (0.6 %) and Uruguay (0.6%).
Guajardo indicates that the impact on GDP is greater in the countries that have received the largest migratory flows of working age and where migrants are more qualified in relation to the local population.
“Given its proximity to Venezuela, Colombia has received a higher proportion of migrants who are not of working age (children or the elderly) and a higher proportion of migrants with fewer years of education, many of whom cannot afford transportation to countries further afield in the region. This explains why the impact on Colombia’s GDP is less than the impact on Peru’s GDP, despite the fact that Colombia has received greater migratory flows relative to its population,” he points out.
It should be noted that these projections until 2030 are based on the premise that Venezuelan migration will continue to grow until reaching 8.4 million people in 2025, equivalent to more than 25% of the population that Venezuela had in 2015.
This will require that the receiving states maintain reception policies and maintain support for new arrivals with humanitarian aid and access to education, health and basic services.
But what can these countries do to maximize the impact on their GDP of the arrival of Venezuelan migrants?
Guajardo recommends that they facilitate the integration of migrants into the formal labor market, granting work permits and validating studies and academic titles.
“This would allow migrants to find jobs commensurate with their level of education and thus increase the productivity of the economy. It would also reduce the cost to governments of providing humanitarian aid and access to education, health, and basic services, as migrants would be able to afford some of these expenses themselves and would pay taxes,” he says.
“In this way, the fiscal costs incurred initially would be more than compensated in the medium term,” he concludes.
I am Jack Morton and I work in 24 News Recorder. I mostly cover world news and I have also authored 24 news recorder. I find this work highly interesting and it allows me to keep up with current events happening around the world.