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UPSE DP 2008-07: Economic Models on the Motives behind Migrant Workers’ Remittances

International migration and its concomitant remittance flows are among the strongest and most massive social forces attending the process of globalization today. United Nations estimates in 2000, cited in Kapur and McHale (2003) and World Bank (2006), set the number of international migrants at between 150 and 175 million, or 3 percent of the world population,1 with the stock in high‐income countries calculated to have been growing at 3 percent per year between 1980 and 2000, from 2.4 percent per year in the previous decade. The outcome has been that the proportion immigrants in the developed world almost doubled in the last 30 years of the previous century. And as may be expected, remittances to developing countries have inexorably risen, from $17.7 billion in 1980 to $31.2 billion in 1990 to $85.6 billion in 2000 and $301 billion in 2006.2 Perhaps even more significantly, sea changes in the economic and political landscape are being wrought in the wake of these developments. In the rich countries, there is a nagging and steadily spreading suspicion that immigrants are not only keeping wages (and thus incomes) down but also crowding out citizens‐at‐birth in the job market. On the other hand, because of the insensitivity of public policy to immigrant concerns, there is growing disaffection and alienation, particularly among the immigrant youth. Not only are social tensions rising in consequence, already there is bleeding into xenophobia, intolerance, and acts of violence, if not terror, that threaten to rend the social fabric of these nations. What has received less attention and therefore needs to be underscored all the more is that where successful assimilation has taken place, immigrants have not only profited in terms of wealth accumulation and enhanced social status, they have also contributed tremendously to the improvement of social welfare in their adopted countries. On the other side of the income divide, remittance inflows have proved to be a mixed blessing. As Kapur and McHale (2003) observe, transfers from migrant workers have become the most reliable source of foreign exchange for developing countries—the primary source of “foreign investments” in family‐run microenterprises and the lifeblood of many in failed states such as Afghanistan, Haiti, Liberia, and Somalia, but also the financial pipeline that sustains the internecine strife in Sri Lanka and Rwanda and that shore up the bellicose foreign policies of poor countries like Armenia and Eritrea. For good or ill, this has in turn brought a measure of independence to the remittance‐ receiving countries, to some extent freeing their governments, economies, and policies from the grant and loan conditionalities of donor countries and multilateral institutions as

UP-School of Economics
Authors Keywords
Alba, Manuel S.; migrant workers; remittances; migration;
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Published in 2008 and available in the UPSE Library or Downloaded 288 times since November 25, 2011
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