Harnessing Remittances

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Filipinas belly up to the remittance bar in Hong Kong [Stuart Hargreaves / Flickr]

Migrant workers will remit more than $232 billion to their families this year. The money migrant workers earn — harvesting produce in California, cleaning houses in Singapore, and tending children in Kuwait– is meager by the standards of the developed world, but it means everything for their families back home. $232 billion is twice what the world paid out in international aid last year; in Latin America it was more than aid and foreign direct investment combined. This is big business, and economists are just starting to take notice.

This year, the LA Times has been running a series of articles on remittances, calling them “The New Foreign Aid.” Policy makers like this line– they like to shrug off questions about the slim foreign aid budget by coupling those numbers with the huge sums of money that workers are remitting home. It’s all going to the same place, right?

Are remittances better suited to help small communities than aid, or are they just signs that aid is failing? What does it mean that workers are making these kinds of sacrifices, and what will it mean when governments learn to depend on those sacrifices? Are remittances a viable development strategy? One program in Mexico pledges 3 pesos to every one that is remitted and used toward public works. Spain is starting to encourage the Ecuadorian migrants working there to send money home (largely in response to the Spanish banks in Ecuador who will benefit from the cash flow). But can remittances provide the kind of meaningful improvements in education and jobs and infrastructure that would mean future generations wouldn’t have to leave?

Tell us your stories. Do you send money home? Receive? What do the monthly visits to Western Union mean for your life here, and what do they mean for your family? We want to talk about the big issues here: remittances as development, as political power, as foreign aid, as export revenue. Weigh in.

Manuel Orozco

Senior Associate, Inter-American Dialogue

Katrina Burgess

Assistant Professor of International Political Economy, The Fletcher School, Tufts University

Adjunct Assistant Professor, Research, Watson Institute for International Studies

Katherine Andrade Eekhoff

Coordinator for migration and human development programs at the United Nations Development Program in El Salvador

Don Bartletti

Photographer, Los Angeles Times

Contributed four slideshows to The New Foreign Aid series

2003 Pulitzer Prize, Feature Photography

Jose Francisco Avila

President, New Horizons Investment Club

Thanks to Ethan Zuckerman for turning us on to this idea with his remittance business post

Extra Credit Reading

Steve Ntwiga Mugiri, The diaspora, “nation building??? and a pound of flesh. Steve Ntwiga Mugiri (via Kenyan Pundit)

Nextbillion, Remittances, World Resources Institute

Manuel Orozco, Worker Remittances in an International Scope, Inter-American Development Bank, March, 2003

The World Bank, Global Economic Prospects: Economic Implications of Remittances and Migration, 2006

On our own blog, Nother has done some reporting, talking to a Brazilian waitress at his restaurant in Somerville, Mass.

I asked her how many of the South Americans we work with are documented. She said “me.??? I asked her out of all the Brazilians she knows in her daily life here, what percentage are here “illegally,??? she said 90%. During lunch she talked about personal experiences and the experiences of our co-workers in getting into this country. She reacted like no American had ever asked her these questions before, even her husband.

…

Petra told me that the bussers we work with work up to 90 hours a week and send about $2000 home a month. They live in places like Framingham 5 or 6 people to a room. People sleep on the floor. She said they use a fake SSN and claim the maximum dependents. She said if these people were allowed to be here legally they would file properly and it would mean more tax revenue for the government.

…

I asked Petra why she wants to be here, why they all go through this. She said, “here, if you work decent, you have a decent life.??? Throughout lunch Petra kept repeating the refrain, “you have no clue.??? “Americans have no clue.??? She said she feels “so blessed.??? She said she did not have electricity till she was 13 years old and even then they used it sparingly. She said the average person in Brazil makes $150.00 a month and they only get paid once a month. They can’t afford air conditioner and to fill up a tank a gas cost $60.00. $3000.00 for a 29’ TV. Her mother pays $300 a month for medicine and if Petra wasn’t sending that money her mother would be dead.

Nother, from a comment to Open Source, May 18, 2006