Moraga and Rapoport (2011) bring up the idea of “visas, not aid” in their paper “Tradable Immigration Quotas”. The contribution of foreign aid to poverty reduction is quite controversial, and the past few decades have seen an increasing dissatisfaction with foreign aid as it has been linked to dependency syndrome in poor countries and increased level of corruption and other rent-seeking activities. More and more poor countries have been saying “trade, not aid” – poor countries want access to rich countries’ markets.
And now, as remittances in poor countries have been increasing in size, with remittances becoming triple the size of foreign aid between 1995 and 2008, there is a growing sense of the importance of labor migration. Remittances are seen as a more effective source of foreign exchange for development and poverty reduction (Moraga and Rapoport, pg. 5).
Moraga and Rapoport point out that visas, as part of aid strategy, are not a new idea: in the aftermath of Hurricane Mitch in 1998, thousands of Hondurans and Nicaraguans were allowed into the US as part of the Temporary Protected Status (TPS) mechanism enacted in 1990. Most recently, TPS was also granted to thousands of illegal Haitians immigrants following the earthquake in Haiti in 2010.
Economists have proposed different mechanisms and policies that would lead to a win-win situation for both rich and poor countries: the two that I have found persuasive are temporary guest-worker agreements proposed by Lant Pritchett (2007) and tradable immigration quotas by Moraga and Rapoport. Temporary guest-worker agreements are negotiated bilaterally where rich countries certify labor shortages in specific industries and labor-sending countries ensure that temporary workers return home after their assignment. Tradable immigration quotas, similar to pollution quotas, are put on the market and countries can trade. A major improvement in their proposal is that it takes into account preferences of migrants on where to go.