Sridhar Vembu graduated with a bachelor’s degree in electrical engineering from IIT Madras and then went on to graduate work at Princeton and then to Qualcomm, focusing on satellite communications. While there, Vembu explored a gap in the market for enterprise software aimed at small and mid-sized companies. In 1996, he founded a software development house for network equipment providers called AdventNet, renamed Zoho in 2009 and refocused on providing tools including customer relationship, accounting, email, and project management. Zoho set up offices and R&D centers in villages and small towns like Tenkasi, Tharuvai, and Renigunta in India starting in 2011, and Vembu himself returned to India in 2019. His net worth is estimated at over $2 billion.
The story of Vembu is far from unique. People moving across the world and back home have long been the most powerful force for building trade and investment links, creating global value chains, and fostering technology exchange. That process can involve travel for as short as a midweek business trip but often involves years or lifetimes. Facilitating that mobility should be a key part of the growth strategy for the world’s poorest countries. In a new policy paper, I discuss the channels and scale of the impact of emigration on economic growth, compare that to the scale of the traditional path to rapid growth through manufacturing, and suggest some policy conclusions for origin countries.
Emigration is already a major source of income for many developing countries. When a worker moves from a poor country to a rich one, their wages can increase as much as eightfold. Even if only around 15 percent of that comes back as remittances, it can exceed what the same worker would have earned at home in a factory. In Lebanon, Tajikistan, Honduras, and Nepal, these remittances exceed a fifth of national income. For 37 percent of countries worldwide, remittances are already larger than manufactured exports as a share of GDP. Across Africa, Latin America, and Asia, remittances have been shown to cushion income shocks, support education and health spending, and finance entrepreneurship
Beyond remittances
But the benefits of emigration go well beyond the money workers send home. It encourages potential future migrants to develop marketable skills whether they end up migrating or not. And emigration builds lasting trade and investment bridges between countries. Migrants like Sridhar Vembu helped enable the growth of an Indian IT sector that eventually surpassed the United States in IT services exports. A similar dynamic is visible in Bangladesh: workers went to Korea to work in garment factories and returned home—alongside South Korean investment—to build what became one of the world’s largest apparel export industries. Migration, in short, is not just a source of household income; it is a mechanism for structural transformation.
This is already a large opportunity—and it is growing fast. The working-age population of high-income countries, which was growing at about six million people per year as recently as 2008, is now declining by two million a year. Add in upper-middle-income countries, and the working-age population will decline by 10 million per year by the 2030s. Meanwhile, retirees have especially high demand for services—from hospitality and health care to entertainment—that will require the import of workers to meet. Some richer countries are already failing to find the immigrants they need: in 2022, Malaysia tried to recruit nearly half a million migrant workers but only 76,000 applied. Current patterns suggest that demand will outstrip supply by more than 30 million people by 2050.
Sustaining the absolute number of working-age people in high-income countries between 2020 and 2050 would require attracting additional working-age migrants equal to about 0.1 percent of the total high-income population each year—a manageable number. And even many governments elected on anti-immigration platforms in rich countries are quietly increasing the attractiveness of their immigrant offer for particular jobs: better visa terms, financial support, and clearer pathways to work. Related to that, public attitudes toward accepting workers in specific sectors—nurses, care workers, engineers—are considerably more positive than attitudes toward migration in general.
To fully benefit from emigration, countries should manage it
To seize this opportunity, developing countries need to move beyond simply letting emigration happen and start actively managing it. That starts with signing bilateral labor agreements—historically, doing so increases migration flows by 76 percent. Another step is to establish institutions to protect workers abroad and support their return, as the Philippines has done through its Overseas Employment Administration and Overseas Workers Welfare Administration. It means tailoring education and vocational training to skills in demand abroad: joint nursing curricula are already being developed between Germany, India, and the Philippines, and linking technical training to migration pathways can improve program quality, placement rates, and student uptake all at once. It also means focusing on the right kind of emigration—particularly skilled, circular migration to high-income countries—and creating the domestic conditions for emigrants to return with capital, knowledge, and networks that can be put to productive use. And governments should build bilateral skills partnerships with countries seeking workers in sectors where there is also growth potential at home, following the model of India-US IT and Bangladesh-South Korea textiles.
Even as the strategy of using manufactured exports to kickstart rapid growth is showing its age, a strategy focused on the movement of people rather than goods is coming into its own. Emigration as a growth strategy could help ensure continued growth and convergence through the twenty-first century.
