Person:
Ratha, Dilip

Development Prospects Group, World Bank

Fields of Specialization

migration and development; remittances

External Links

People Move
Global Knowledge Partnership on Migration and Development

Departments

Development Prospects Group, World Bank

Last updated January 31, 2023

Biography

Dilip Ratha is Lead Economist and Manager, Migration and Remittances, and CEO, Global Knowledge Partnership on Migration and Development (KNOMAD) in the Development Prospects Group of the World Bank. He is the focal point for the World Bank’s Migration Working Group and the Diaspora Bond Task Force, and a co-coordinator of the (G8) Global Remittances Working Group. According to the New York Times, “No one has done more than Mr. Ratha to make migration and its potential rewards a top-of-the-agenda concern in the world’s development ministries.” Besides migration and remittances, Dilip’s research reflects a deep interest in innovative financing for poor countries: diaspora bonds, future-flow securitization, shadow sovereign ratings and South-South foreign direct investment. He is currently the chair of the Consortium Advisory Group (and previously the founding CEO) of the Migrating out of Poverty Research Consortium based in the University of Sussex. Prior to joining the World Bank, he worked as a regional economist for Asia at Credit Agricole Indosuez, Singapore; as an assistant professor of economics at the Indian Institute of Management, Ahmedabad; and as an economist at the Policy Group, New Delhi. He has a Ph.D. in economics from the Indian Statistical Institute, New Delhi where he also worked as a visiting lecturer and helped build a CGE model of the Indian economy. Dilip hosts People Move, a popular blog and can be followed on Twitter at @DilipRatha.

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Publication Search Results

Now showing 1 - 10 of 45

Impact of Remittances on Household Income, Asset and Human Capital: Evidence from Sri Lanka

(Taylor and Francis, 2012-10-25) De, Prabal K. ; Ratha, Dilip

This paper explores the developmental impacts of international remittance income on the recipient households. The empirical analysis proceeds in two parts. In the first part, we show that remittance income largely accrues to the families belonging to the bottom quintiles of the income distribution helping the recipient families move up the income ladder. In the second part, we show that remittance income has positive and significant effect on children health and education, but not on conspicuous consumption or asset accumulation. We argue that remittance income is targeted better and not as fungible as other sources of transfer income, as the senders closely monitor it. We use bias-corrected matching estimators to control for self-selection issues.
Migration and Remittances during the Global Financial Crisis and Beyond

(Washington, DC: World Bank, 2012-06-01) Sirkeci, Ibrahim ; Cohen, Jeffrey H. ; Ratha, Dilip ; Sirkeci, Ibrahim ; Cohen, Jeffrey H. ; Ratha, Dilip

Immigrants tend to be more negatively affected by economic crisis than natives, particularly when governments apply strict immigration controls. With the onset of the financial crisis in the latter half of 2008, there were widespread concerns: would migrants return to sending countries and communities in large numbers, adding further economic woes to countries already facing difficulties? Would remittance flows slow and potentially cease? The literature offers little guidance on these questions. It is always a challenge to collect data, analyze, interpret, and make recommendations as the phenomenon under study is still unfolding to reveal new turns and twists. The most recent financial crisis and its repercussions are yet to be completed, and scholars have only begun processing the event. This volume is an effort to bring together in one place fresh thinking and evidence from around the world on the outcomes of mobility in the context of global financial crisis. This book is perhaps the first comprehensive study of remittances during the financial crisis and is a timely addition to the literature. It comes at a time when countries are grappling with the global financial crisis and it's after effects. The resilience of remittances is good news for developing countries, but leveraging remittances for socioeconomic development remains a key challenge. The studies in this book identify and discuss key patterns observed in remittance practices across the world and possibilities for the future.
Development Finance via Diaspora Bonds: Track Record and Potential

(World Bank, Washington, D.C., 2004-08) Ketkar, Suhas L. ; Ratha, Dilip

A diaspora bond is a debt instrument issued by a country - or potentially, a sub-sovereign entity or a private corporation - to raise financing from its overseas diaspora. Israel and India have raised $35-40 billion using these bonds. Drawing on their experiences, this paper discusses the rationale, methodology, and factors affecting the issuance of diaspora bonds for raising external development finance. The Government of Israel has offered a flexible menu of diaspora bonds since 1951 to keep the Jewish diaspora engaged. The Indian authorities, in contrast, have used this instrument for balance of payments support, to raise financing during times when they had difficulty in accessing international capital markets. Diaspora bonds are often sold at a premium to the diaspora members, thus fetching a "patriotic" discount in borrowing costs. Besides patriotism or the desire to do good in the investor's country of origin, such a discount can also be explained by the fact that diaspora investors may be more willing and able to take on sovereign risks of default in hard currency as well as devaluation as they may have local currency liabilities and they may be able to influence the borrower's decision to service such debt. The paper discusses several conditions for successful diaspora bond issuance having a sizeable diaspora, especially first-generation migrants, is understandably an important factor affecting the issuance of diaspora bonds. Countries with strong and transparent legal systems for contract enforcement are likely to find it easier to issue such bonds. Absence of civil strife is a plus. While not a pre-requisite, presence of national banks and other institutions in destination countries facilitates the marketing of bonds to the diaspora.
Remittance Flows in 2011 : An Update

(World Bank, Washington, DC, 2012-04-23) Ratha, Dilip ; Silwal, Ani

Officially recorded remittance flows to developing countries are estimated to have reached $372 billion in 2011, an increase of 12.1 percent over 2010. The growth rate of remittances was higher in 2011 than in 2010 for all regions except Middle East and North Africa, where flows were moderated by the Arab Spring. Remittance flows to developing countries are expected to grow at 7-8 percent annually to reach $467 billion by 2014. Worldwide remittance flows, including those to high-income countries, are expected to reach $615 billion by 2014. Major revisions to our December 2011 estimates include remittance flows to Egypt, India, China, and Thailand.
Outlook for Remittance Flows 2012-14 : Remittance Flows to Developing Countries Exceed $350 Billion in 2011

(World Bank, Washington, DC, 2011-12-01) Mohapatra, Sanket ; Ratha, Dilip ; Silwal, Ani

Officially recorded remittance flows to developing countries are estimated to have reached $351 billion in 2011, up 8 percent over 2010. For the first time since the global financial crisis, remittance flows to all six developing regions rose in 2011. Growth of remittances in 2011 exceeded our earlier expectations in four regions, especially in Europe and Central Asia (due to higher outward flows from Russia that benefited from high oil prices) and Sub-Saharan Africa (due to strong south-south flows and weaker currencies in some countries that attracted larger remittances). By contrast, growth in remittance flows to Latin America and Caribbean was lower than previously expected, due to continuing weakness in the U.S. economy and Spain. Remittance costs have fallen steadily from 8.8 percent in 2008 to 7.3 percent in the third quarter of 2011. However, remittance costs continue to remain high, especially in Africa and in small nations where remittances provide a life line to the poor.
Remittances to Developing Countries Will Surpass $400 Billion in 2012

(World Bank, Washington, DC, 2012-11-20) Ratha, Dilip ; Aga, Gemechu Ayana ; Silwal, Ani

The officially recorded remittances to developing countries are expected to reach 406 billion dollar in 2012, up by 6.5 percentage from 381 billion dollar in 2011. The true size of remittance flows, including unrecorded flows through formal and informal channels, is believed to be significantly larger. Compared to private capital flows, remittance flows have shown remarkable resilience since the global financial crisis, registering only a modest fall in 2009, followed by a rapid recovery. The size of remittance flows to developing countries is now more than three times that of official development assistance.
Sovereign Ratings in the Post-Crisis World : An Analysis of Actual, Shadow and Relative Risk Ratings

(World Bank, Washington, DC, 2013-10) Basu, Kaushik ; De, Supriyo ; Ratha, Dilip ; Timmer, Hans

This paper analyzes the evolution of sovereign credit ratings in the wake of the global financial crisis by studying changes in actual, shadow, and relative ratings between 2008 and 2012. For countries that do not have a rating from the major rating agencies, shadow ratings are estimated as a function of macroeconomic, structural, and governance variables. The shadow rating exercise confirms earlier findings in the literature that even after the financial crisis, many unrated countries appear to be more creditworthy than previously believed and can access international capital markets. The paper also develops a new rating scale called the "relative risk rating," which ranks countries according to their actual or shadow ratings after controlling for changes in the world weighted average rating. When relative ratings in 2012 are compared with the first half of 2008, the world average rating is found to be weaker because of the financial crisis. The relative rating improved in developing economies such as Azerbaijan, Ethiopia, Kazakhstan, Indonesia, and the Philippines, whereas it deteriorated in crisis-affected high-income countries such as Cyprus, Greece, Spain, Portugal, Ireland, and Egypt. Interestingly, India, Jordan, Poland, and the United Kingdom had their rating outlook downgraded by the rating agencies, but their relative rating actually improved as other countries suffered even worse downgrades. A regression model is used to analyze the relative contributions of different variables to rating changes during 2008-2012, a helpful feature for policy makers interested in improving sovereign ratings.
Development Financing during a Crisis : Securitization of Future Receivables

(World Bank, Washington, DC, 2001-04) Ketkar, Suhas ; Ratha, Dilip

Mexico's Telmex undertook the first future-flow securitization transaction in 1987. From then through 1999, the principal credit rating agencies rated more than 200 transactions totaling $47.3 billion. Studying several sources, the authors draw conclusions about the rationale for using this asset class, the size of its unrealized potential, and the main constraints on its growth. Typically the borrowing entity (the originator) sells its future product (receivable) directly or indirectly to an offshore special purpose vehicle (SPV), which issues the debt instrument. Designated international customers make their payments for the exports directly to an offshore collection account managed by a trustee. The collection agent makes principal and interest payments to investors and pays the rest to the originator. This transaction structure allows many investment-grade borrowers in developing countries to pierce the sovereign credit ceiling and get longer-term financing at significantly lower interest costs. The investment-grade rating attracts a wider group of investors. And establishing a credit history for the borrower makes it easier for it to access capital markets later, at lower costs. This asset class is attractive for investors-especially buy-and-hold investors, such as insurance companies-because of its good credit rating and stellar performance in good and bad times. Defaults in this asset class are rare, despite frequent liquidity crises in developing countries. Latin American issuers (Argentina, Brazil, Mexico, and Venezuela) dominate this market. Nearly half the dollar amounts raised are backed by receivables on oil and gas. Recent transactions have involved receivables on credit cards, telephones, workers' remittances, taxes, and exports. The potential for securing future receivables is several times the current level ($10 billion annually). The greatest potential lies outside Latin America, in Eastern Europe and Central Asia (fuel and mineral exports), the Middle East (oil), and South Asia (remittances, credit card vouchers, and telephone receivables). One constraint on growth is the paucity of good collateral in developing countries. Crude oil may be better collateral than refined petroleum. Agricultural commodities are harder to securitize. Another constraint: the dearth of high-quality issuers in developing countries. Securitization deals are complex, with high preparation costs and long lead times. The ideal candidates are investment-grade entities (in terms of local currency) in sub-investment-grade countries (in terms of foreign currency). Establishing indigenous rating agencies can slash out-of-pocket costs. Developing standardized templates for certain types of securitizations might help. A master trust arrangement can reduce constraints on size. Multilateral institutions might consider providing seed money and technical assistance for contingent private credit facilities.
Complementarity between Multilateral Lending and Private Flows to Developing Countries : Some Empirical Results

(World Bank, Washington, DC, 2001-12) Ratha, Dilip

Despite the surge in private capital flows in the 1990s, lending by the multilateral development banks continues to be a significant source of external finance for low-income and lower-middle-income countries. And for middle-income countries, which receive the lion's share of private flows, multilateral lending has played an important stabilizing role during times of credit rationing. Even though multilateral loans may have behaved countercyclically with respect to private flows in the short term, these loans also tended to complement private flows in the medium term by signaling-and often fostering-a better investment environment in the borrowing countries.
Demand for World Bank Lending

(World Bank, Washington, DC, 2001-07) Ratha, Dilip

Bridging the external financing gap has been an important factor in borrowing cgovernment's demand for World Bank loans. The demand for IBRD and IDA lending is positively related to an increase in debt service payments and inversely related to a borrowing country's level of reserves. These two variables explain a large part of the variation in IBRD and IDA lending commitments, not only since the Asian crisis but also during tranquil times over the past two decades. Borrowing to service debt during a crisis is consistent with the Bank's role as a lender of last resort as well as with its core development objectives, but such borrowing during tranquil times may conflict with the Bank's long-term objective of reducing poverty. That investment lending commitments are related to debt service payments implies that aid may be more fungible than previously believed. If Bank lending is fungible and there is no guarantee that a particular Bank loan is financing an identified investment project or program, a case could be made for greater use of programmatic lending (with well-defined conditionality) As developing countries become larger and more integrated with volatile international capaital markets, there is also likely to be a greater need for fast-disbursing, contingent program lending facilities from the Bank.