Foreign Remittances, Immigration and Economic Development

In Europe, immigrants from developing countries come in to work and then often send back money to families.  There are also alot of foreign workers in the higher income countries in Asia and the Middle East.  According to a World Bank Report, the developing world is expected to receive $414 billion in migrant remittances in 2013, an increase of 6.3 percent from 2012.   The report states that the top recipients of officially recorded remittances for 2013 are India (with an estimated $71 billion), China ($60 billion), the Philippines ($26 billion), Mexico ($22 billion), Nigeria ($21 billion), and Egypt ($20 billion). Other large recipients include Pakistan, Bangladesh, Vietnam, and Ukraine.  As a percent of GDP the largest recipients include Tajikistan, Kyrgyz Republic, Nepal and Lesotho (25 percent of GDP or higher).

 

The Italian Central Bank publishes all kinds of interesting statistics but their recent release on foreign remittances also provides an interesting picture of recent migration to Italy.  The numbers for the month of September record remittances of 431.7 million euros (about 640 million dollars Canadian).   Annualized, we are looking at billions of euros.  The Italian experience seems to reflect aspects of the World Bank Report as China (Cina) and India are among the biggest sources of foreign remittances as the accompanying figure illustrates.  However, the biggest foreign remittances in Italy are immigrants from closer to home - from Romania at 75.3 million euros or 17% of remittances flowing from Italy.  The Ukraine and Albania are also important destinations for Italian foreign worker remittances.

 

I guess an important question is as follows. In some of these countries, foreign remittances are obviously a very important income source and provide resources for families at home, raises their living standards and probably generates pools of local saving for investment and subsequent economic growth.  At the same time, does the migration of these workers out of developing countries harm long-term development prospects given that the human capital is being employed elsewhere?  Given that this phenonomenon is increasing over time, what are the long term development implications?

Comments

[RPLong]

My opinion - backed by nothing other than personal observation - is that poor countries do not want for skilled labor. No, what poor countries need is capital, and lots of it. And maybe some half decent political systems. While the "average joe on the street" can expect to have exactly zero influence on political systems, especially in corrupt nations, what he very definitely can do is immigrate and send remittances. Clearly a huge boon to recipient nations.