Millions move one way, billions another
Remittances from migrant workers are now almost double official development assistance, the Global Development Finance (GDF) 2005 report of the World Bank says. Migrants from Africa, Latin America and Asia working in the industrialised world sent home $126 billion in 2004, says the report released Apr. 6. Official development assistance (ODA) last year added up to about $72 billion. These remittances have become the second most important source of money for developing countries after foreign direct investment (FDI), the report says.
Migrant workers are now central to economic growth in the industrialised world, and also to financing development in their poorer countries of origin. This is particularly true for Latin America and the Caribbean. According to a report for 2004 by the Inter American Development Bank (IADB), countries in this region received $45 billion from workers in North America, Europe, Asia and Australia. The remittances exceeded the combined flow of all FDI and net ODA to the region, and made Latin America and the Caribbean “the largest remittance market in the world,” says the IADB report ‘Remittances 2004, transforming labour markets and promoting financial democracy’.
In line with the World Bank’s GDF 2005, the IADB report says “remittances are widely recognised as critical to the survival of millions of individual families, and the health of many national economies throughout Latin America and the Caribbean.” Most of the remittances to Latin America continue to come from the US. But in recent years “western Europe has become the fastest growing destination for Latin American migrants, resulting in 12 per cent of the market,” the IADB report says. Unlike foreign aid, migrant remittances go directly to
families in places that are often difficult to reach with development assistance. And while international capital flows have fluctuated with market cycles, remittances have increased even during economic recession.
This was also confirmed at a conference of African finance ministers in Cotonou, capital of the West African nation Benin April 6-7. The conference was devoted to analysing the euro-linked currency union of 14 West African countries, but it also discussed the findings of the World Bank and other international financial institutions on migrant workers’ remittances.
The importance of workers’ remittances is enhanced by the fact that it is anti-cyclical, Senegal finance minister
Abdoulaye Diop said at the conference. Official development assistance can work the other way round. As the World Bank underlines in its new report, the global growth momentum of the last couple of years has peaked, and now “developing country gains are vulnerable to risks associated with adjustments to ballooning global imbalances — especially the $666 billion US current account deficit.” “We should keep in mind that current global financial imbalances pose risks of disorderly exchange rate movements, or of interest rate increases that could threaten these gains,” World Bank chief economist Francois Bourguignon said at the presentation of the GDF report Apr. 6. “Developing countries need to prepare themselves for adjustments, some of which could be sudden.” As the IADB puts it, developed countries need migrant labour, and families back home need the remittances that come from their earnings. It says the number of economic migrants (approximately 175 million) would constitute the sixth most populous country in the world. People move North by the millions, and money moves South by the billions, the IADB report says. — IPS