July 2021, Volume 27, Number 3
Global: Migrants, Covid
Remittances to low- and middle-income economies were $540 billion in 2020, down only slightly from 2019 despite the pandemic and remittances are expected to top $550 billion in 2021.
There are three major reasons why remittances did not drop as expected during the pandemic in 2020. First, many migrants were essential workers and encouraged to continue to work in person in agriculture, retail and other jobs. Some governments opened otherwise closed borders to admit migrant workers to fill farm and health care jobs.
Second, governments in many countries that host migrants enacted safety net programs that preserved jobs and incomes, enabling migrants to continue to send money to families at home from both their earnings and income support. Third, with less international travel, some money that would have been carried home personally was sent via banks and transfer services, increasing the share of remittances that was transferred via formal channels.
Remittances are concentrated in a few countries. India and China received a quarter of remittances to LDCs in 2020, and the top five recipients, India, China, Mexico, Philippines, and Egypt, received a total of $251 billion or 46 percent of all remittances to LDCs. Remittances are the highest share of GDP in island nations such as Tonga, and countries in turmoil such as Lebanon, accounting for a third or more of their GDP. Remittances are more than a quarter of GDP in the ex-USSR countries of Kyrgyz and Tajikistan.
The ILO in June 2021 estimated that Covid eliminated 114 million jobs in 2020 and prevented the creation of an estimated 30 million new jobs. There were 187 million jobless workers globally before the pandemic; the ILO projects that the number of unemployed will remain above 200 million until 2023.
Covid. Government responses to the pandemic in 2020 and 2021 fueled partisanship and polarization in many countries. Some wanted the central government to assume more powers to keep people at home to prevent the spread of Covid, while others argued for more individual freedom and local control. The pandemic exposed the trust gap between government institutions and many people in society.
Governments have taken on record debt to deal with covid, so that total government debt exceeds global GDP of $88 trillion. The government debt of the 20 rich industrial countries reached 125 percent of GDP in 2020, led by Japan where government debt is 250 percent of GDP. However, average yields on government debt have fallen from over 12 percent in the early 1980s to less than two percent today.
Rising government debt is facilitated by low interest rates, which reduce make the cost of paying bondholders. Many critics warn of the risk to inflation, arguing that governments that were criticized for not doing enough during the 2008-09 recession are trying to ensure they do not underspend to recover from covid.
Many governments and businesses want vaccine passports to facilitate travel and full participation in mass events. Many schools require pupils to show proof of vaccination for childhood diseases, and advocates of vaccine passports embrace the same principle for Covid. The European Union is developing a Digital Green Certificate to allow free movement with the 27-nation Schengen block.
Governments in countries that receive guest workers often insist that newly arrived migrants be vaccinated. However, less than five percent of adults in Bangladesh and Nepal are vaccinated, making it hard for workers in these countries who have contracts to work abroad to leave. At least 90,000 Bangladeshis and 35,000 Nepalese with work contracts have been unable to leave because of vaccine shortages. Many destinations do not accept the Chinese-made Sinopharm vaccine as proof of vaccination, which is the major vaccine available in these countries.
As tourism increased in 2021, there were worries about unvaccinated workers serving vaccinated travelers and leading to breakthrough cases among those who had been vaccinated; vaccination rates are low in many tourist destinations. There were about 1.5 billion international tourist arrivals in 2019 and 380 million in 2020, down 75 percent.
G7 leaders meeting in Cornwall, UK pledged to donate a billion doses of the Pfizer covid vaccine. The US paid about $7 a dose for the 500 million Pfizer doses donated to Covax, the system established to provide vaccines to poorer countries.
President Biden ordered a review of the origins of the corona virus amidst a debate over whether the virus escaped from the Wuhan Institute of Virology. Since the 1970s, there has been gain-of-function research, which means that researchers insert genes or encourage gene mutations that allow a virus to grow faster, transmit easier, or resist immune responses. The goal of such research is to improve preparations for future pandemics, but the research could wind up producing viruses that lead to pandemics.
Population. There were 7.8 billion people worldwide at the end of 2020, when the global fertility rate was 2.3, meaning that the average woman has 2.3 children. The global population increases by 1.1 percent or 86 million a year, and is on track to reach 10 billion in 2050.
There are several ways to classify countries. The UN divides countries into more and less developed. The 30+ more-developed countries have 1.3 billion people and a fertility rate of 1.6, which means that deaths exceed births and populations will shrink without immigration. The 170+ less-developed countries have 6.5 billion people and a fertility rate of 2.5, so that all of the expected 2.2 billion increase in global population over the next three decades is in less-developed countries.
The UN classifies Gulf oil exporters, Singapore, and Taiwan as less developed countries despite high-per capita incomes.
The World Bank divides countries into high, middle and low income. The high-income countries (per capita incomes above $12,500) have 1.2 billion people, a fertility rate of 1.6, and a projected population of 1.3 billion in 2050. The middle-income countries ($1,000 to $12,500) have 5.8 billion people, a fertility rate of 2.2, and a projected population of 7.1 billion in 2050, while low-income countries (less than $1,000) have 750 million people, fertility of 4.6, and a projected 1.5 billion people in 2050.
As census results from 2020 were released in 2021, many countries reported slower population growth or declines in their populations. If low fertility persists, there are likely to be many adjustments in social welfare systems created after WWI that assume that ever larger cohorts of working age people will pay taxes to support the elderly.
Between 1900 and 2000, the world’s population rose from 1.6 billion to 6.1 billion. By 2000, a third of the world’s people were in China and India.
South Korea has the world’s lowest fertility rate, about one baby born per woman in 2020, while Niger has the highest rate of about seven births per woman. The Korean government offers child allowances to encourage more births, which has not increased fertility significantly. If the population pyramid of a few old people and many babies flips to have many elderly and few children, older people will have to work longer and expect fewer government benefits.