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European Migrant Remittances Often Surpass Aid
One of the growth industries in finance of late has been arranging transfers of funds from migrant workers to their families back home. A recent study by the World Bank shows that, for some European and Central Asian countries, remittances add up to more than official aid does. While aid packages are important, the direct infusion of money in this way does even more good.
The study relies on data from 2004, but anecdotal evidence suggests that in 2006 the numbers were much the same. For the region studied, which includes the former Soviet republics, official remittances were in excess of US$19 billion. The actual figure is much higher because visitors often bring cash gifts when they return briefly to the old country.
According to the World Bank, the benefits of migration include:
- Receiving countries could fill labor shortages, increase revenue, and reduce social tensions related to undocumented and unmanaged migration;
- Sending countries would accumulate human capital that might otherwise be lost; and
- Migrants could increase their income, build human capital and financial savings, maintain links with their families, pay lower remittance costs, and create trade/investment linkages between countries.
Beyond that, those who stay behind have a second source of external funding for small projects. Professor Muhammad Yunus won the Nobel Prize in Economics last year for his work on microloans and their role in the development of places like Bangladesh. Remittances can serve a similar purpose in the form of a grant or loan among family members. Even when the money is merely used for food and utilities, it represents an increase in the wealth of the people receiving it. And increased wealth is, perversely, a necessary condition for further economic development.
None of this alters the debate elsewhere about illegal immigration because that is a matter not of economics but legal status. A legal immigrant is protected by the laws of the host nation, whereas an illegal is little better than a slave, fair game for the exploiters. That social values are affected by large scale immigration is indisputable, but social change happens anyway in a technological society. Sometimes, it is important to remember that the free movement of people across borders makes as much economic sense of free movement of people within them. The debate should be about the word “illegal” not about the word “immigrant.”
© Copyright 2007 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.
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