Fri, May 30, 2003 - Page 9 News List

Helping where it's needed

Migration has shown itself a proven method of bringing immediate relief and stability to poor countries

By Scott Wallsten


Globalization stands accused of generating economic instability in developing countries and greatly exacerbating poverty, at least in the short run -- which is the longest period the world's poor can afford to care about. Critics point to the string of economic crises in Africa, Asia and Latin America in recent years, often attributing them to multilateral lenders' demands for full liberalization of foreign trade and capital flows, privatization, and fiscal austerity.

But the raging debate over globalization often overlooks an increasingly important feature that makes life better and more stable for poor people in developing countries right now -- the many millions of migrants who send money home. Data on families in developing countries that receive money from relatives working abroad directly demonstrate that at least one element of globalization -- migration -- increases economic stability in poor countries.

Migrants from struggling countries in Latin America, Southeast Asia and other regions are increasingly securing jobs at wages that, while low by rich country standards, are far higher than they could dream of back home. In 2001, workers from low- and middle-income countries sent home a staggering US$43 billion -- more than double the level of a decade earlier and US$5 billion more than that year's total official foreign aid to these countries.

Migrant workers may send money home for a variety of reasons: to maintain good family relations, to ensure an inheritance or to re-pay a loan from elders. But whatever the reason, these so-called "remittances" -- the cash workers send home to countries like Colombia, Haiti, Jamaica, Mexico and Bangladesh -- act as a safety net that their governments typically need but cannot afford to provide.

This is particularly true in small, developing economies. Here incomes are often considerably more volatile than in richer countries, owing to heavy reliance on a few commodities or industries and hence higher vulnerability to external shocks, including weather-related and other natural disasters.

Indeed, poor countries also often lack the private insurance needed to offer the type of emergency assistance that citizens of wealthy nations have come to expect. In developing countries, remittances from workers abroad amount to the best insurance around. In addition to providing their families at home with a much-needed source of stable income, expatriate migrant workers send home even more money when catastrophe strikes.

Such remittances enabled thousands of Jamaicans, for example, to recover from the devastation of Hurricane Gilbert in 1988, when storm damage was estimated at more than one-quarter of the country's annual GDP and nearly three households in four reported damage. Insurance was scarce and the government offered only limited help, providing a mere fraction of the aid that was actually needed. Jamaican families got far more help from loved ones living and working in places like Miami, New York and Los Angeles.

The same was true when Argentina's economy collapsed last year, when violence wracked Haiti and a hurricane ravaged Honduras before that, and whenever floods submerge villages in Bangladesh. In case after case, billions of dollars in remittances from migrants have given families in poor countries what their governments (and foreign donors) could not always provide: food, safety, the resources to recover and hope.

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