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| Does the money immigrants send home do any good? |
| 2006-03-30 |
| Scientific American article: The Check Is in the Mail Does the money immigrants send home do any good? [..] Even though the average migrant sends back just a couple of hundred dollars a month, it adds up to serious money. The World Bank estimates that developing countries received $167 billion last year--twice as much as they got in foreign aid. Mexico's intake has quintupled in a decade, to $18 billion; labor is now the country's biggest export after oil. And that is just the amount flowing through official channels. To be showered with money seems like a happy arrangement for the receiving country. Yet in the 1980s remittances acquired a reputation among social scientists as "easy money" that, like an oil windfall, can rot out an economy. Case studies have found that recipients invest little of the money in farm equipment or business start-ups, preferring instead to go on shopping sprees. People grow dependent on the MoneyGram in the mail, and all that cash sloshing around pushes up inflation. Those not so lucky to have relatives abroad fall behind, worsening social inequality, and exporters' costs rise, making it harder for them to compete in global markets. In the 1990s, though, Durand and others argued that case studies do not track the full effect of remittances as they ripple through an economy. Even if families do not invest the money, the businesses they buy from do, so remittances can jump-start growth. In one widely cited model, $1 of remittances boosts GDP by $3. The infusion of money makes a real difference in places where entrepreneurs have no other access to capital. Compared with alternatives to catalyze economic development, such as government programs or foreign aid and investment, remittances are more accurately targeted to families' needs and more likely to reach the poor. Today the debate has settled into a "both sides are right" mode. Some towns achieve prosperity aided by remittances; others get trapped in a cycle of dependency. A number of cross-country analyses, such as one last year by economist Nikola Spatafora of the International Monetary Fund and his colleagues, have concluded that nations that rake in more remittances have a lower poverty rate--but only barely. A larger effect is to smooth out the business cycle, because migrants increase their giving during economic downturns in their homelands and scale it back during upswings. Averting the disruptive extremes of boom and bust can help bring about long-term growth. One burning question is whether immigrants who sink roots into their adopted countries send less money. "Some people are actually saying that in Mexico remittances might stop in 10 years' time," says World Bank economist Dilip Ratha. Meanwhile his institution and others are working to procure good data. "When these flows are as large as they are and as important as they are," Ratha says, "it would be worth investing in a better database." |
| Posted by:3dc |
| #7 Zenster--Shells merely a house of cards? A house of cards with parasites hooked in at the top? Block that metaphor! Danielle, renters DO pay property tax. Surely you don't think the landlord pays it cheerfully, without passing on the costs to the tenants? |
| Posted by: mom 2006-03-30 21:42 |
| #6 IMHO, the host countries won't be any better until their way of doing things are cleaned up. That is business, government, law enforcement, etc. The home countries are not evolving and developing positively when they depend up a huge labor force working somewhere else and sending back money. Take a look at Mexico. Great oil potential, manufacturing, tourism. But it is a mess. The oligarcy likes the status quo, so nothing happens and in the case of Mexico, the US is the safety valve. |
| Posted by: Alaska Paul 2006-03-30 20:59 |
| #5 And after having rreceived all this free money for years from America (and other western countries), they fund their own illegal arrival on the shores - entititled to their entitlements. Heck, they are already citizens in their own minds. |
| Posted by: Thinemp Whimble2412 2006-03-30 19:39 |
| #4 You've got to wonder what it says about a nation, like Mexico or the Philippines, when self-exiled individuals who remit earnings to support their stranded families are the country's largest economic sector. In other words, aren't these shells merely a house of cards with some major parasites hooked in at the top? The flipside of the coin is just how much more successful would the host countries be without all of that cash flight? |
| Posted by: Zenster 2006-03-30 13:13 |
| #3 The money sent back home also doesn't go into the local consumer-based economy in the local communities. Small local businesses in agricultural areas do not benefit, as they establish their own groceries imported from home and don't spend it here. The immigrants rent, not paying property taxes to support the local public schools. They also use the emergency room for primary medical care, at taxpayers expense. It has the opposite effect of the economic boost that tax breaks give by putting money into circulation. Sending money home encourages the illegals even more. Immigrants that come here should want to become Americans,learn English and good citizenship, like paying taxes, and not for the free ride at taxpayers expense it has become. I don't want my children to be Islamomexican. |
| Posted by: Danielle 2006-03-30 11:43 |
| #2 Mexico City 2013? [video] Preview Someone know something we don't? |
| Posted by: Glailing Clomble9233 2006-03-30 08:59 |
| #1 Well, Fox thinks it does good. It is the only thing holding up his corrupt government. |
| Posted by: DarthVader 2006-03-30 08:17 |