Development, Remittances and Coalition Heads in the Sand

A lot has been written about the way in which remittances (the money sent back by working migrants to families remaining in their country of origin) are a significant contributory factor in development for receiving countries.

The amount of money flowing from the industrialised world to the developing world via remittances outstrips the amount of Development Aid granted by western governments. The total transfers through remittances now rivals the Foreign Direct Investment (p3) flows to developing countries. The World Bank, in its latest Migration and Development Brief, reports that $351 billion of remittances were made in 2011. Figures for total aid in 2011 are not yet available, but in 2010 the total was, according to the OECD, about $128.7 billion.

Billions and billions

The World Bank’s report has promising news in the way that remittances have risen for every region of the global South for the first time since the global economic crisis began in 2008, and the rise in the flow of money outstripped expectations in four of the six regions.  Futhermore, with current trends applied to the next three years, remittances could reasonably be expected to reach $441 billion by 2014 (a rise of 7-8% per annum).

This is good news, for both the sender and recipient countries. Research by UKBA’s Migration Advisory Committee has shown that migrants have a beneficial economic effect (p134) for the host country for the UK. The benefits for the migrants’ countries of origin are perhaps more apparent. Migrants returning home are more likely to establish businesses once returned, money sent home (although hard to track) is a crucial part of development according to the World Bank’s Senior Economist David McKenzie, so much so that the Philippines have made labour migration a part of their development strategy. Some proponents of the free market suggest that scrapping aid and opening borders would be a far better spur to development and relief to the effects of disasters than the current system of paternalistic grant giving by the west.

Clouds

But this is not simply a posting about how lovely everything is in the remittances garden. The World Bank report identifies a few dark clouds on the horizon, spoiling the view to a significant amount of progress over the coming years.

The continuing economic crisis is now showing marked rises in unemployment in European countries. Although migrant unemployment in Germany and the UK seems to be resisting these rises, there is an uncertain future ahead for workers wherever they come from.

Oil

Hardening attitudes towards immigration and immigrants will result in economic damaged inflicted on both host and origin countries (p10). Volatility in the world economy affecting both exchange rate and oil prices introduce further uncertainty into the future prospects of remittances and their beneficial effects for development and economic growth.

Essentially, the proclaimed intent of politicians wishing to see successful markets, increasing trade and the end of poverty need to seriously address the role of immigration and labour mobility. Any pretence that the struggle of developing nations to develop can be resolved by maintaining barriers to people as they try to sell their labour need to be ditched. People become migrants to improve the prospects for themselves and those closest to them, in the same actions benefit the economies of countries to leave and arrive in.

A greater understanding of these choices – even through the cold, hard lens of economics – would deliver a better future for all. The World Bank seems to understand this – why then does the Coalition Government wilfully ignore the facts?

About jcwi

Joint Council for the Welfare of Immigrants is a key campaigning voice in the field of immigration, asylum and nationality law and policy. It is completely independent from government funding, remaining entirely free from government influence. View all posts by jcwi

One response to “Development, Remittances and Coalition Heads in the Sand

  • Dr. Joseph Mullen

    Given the 20 years of near-continuous warfare in Somalia, maigrant remittances are a virtual lifeline to many families that are displaced and often suffering from hunger. It is estimated that the Somali diaspora remit upwards of US$ 1 billion to family and economic activities in Somalia, through mainly the informal ‘hawala’ system. This figure dwarfs the amount contributed by all the aid agencies together both humanitarian and developmental, who contributed $272mn. (source:World Bank).
    Remittances go direct to the beneficiaries while only a small proportion of aid actually reaches the intended beneficiaries. Perhaps the contribution of migrants could be acknowledged in the overseas aid budgets of western countries.

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