"Poor people sending even poorer people $100"

October 17, 2007 11:03 PM

What is the most important antipoverty program in the world? The surprising answer is remittances, the earnings sent from overseas workers back home - which, according to a new study, totals over $300 billion a year. There is an interactive map that shows you the impact per country: over 10% of the GDP of economies such as Morocco, Jordan, and the Philippines comes from these payments, which are often the largest source of investment for most developing countries. The New York Times has a neat feature showing how global migration and remittances are tied together.
posted by blahblahblah (29 comments total)

Cheers for this. I know my parents, who were immigrants, send money back to the "motherland" on a regular basis. As well as my friends who are originally from Peru, Mexico, Cuba, Palestine & Kenya. I think in most instances it's almost expected of immigrants.
posted by wilde at 11:34 PM on October 17, 2007

"Suprising answer" for those who've never studied international affairs in the vaguest sense.
posted by raevyne at 11:40 PM on October 17, 2007

pardon the typo on surprising
posted by raevyne at 11:42 PM on October 17, 2007

bah, my girlfriend is Filipino and we both live in China. I hold her and her ilk responsible for her countries economic and political misfortunes... the talented people book it for better paying jobs without trying to create opportunity back home. Essentially, everyone you want running the country got out leaving mostly corrupt greedheads back home to sort things out. I think the damage done by not having her in the work force, or teaching, or working in government exceeds the few hundred USD she sends back every so often.

On a related note, a Chinese school recently denied one of my friends, an English teacher, the opportunity to study/travel in the US in one of their programs. The reason? Though she has a husband, she doesn't have a child. She'd be too likely to not come back. Cruel, but smart, move against brain drain.
posted by trinarian at 12:03 AM on October 18, 2007 [1 favorite]

I would have sent you some money but I sealed the envelope first.

You're loving son,
posted by sourwookie at 12:20 AM on October 18, 2007

This is why Western Union sponsor any and everything to do with immigrant culture.
posted by asok at 2:08 AM on October 18, 2007

I hold her and her ilk responsible for her countries economic and political misfortunes...

About Poland:

Remittances from abroad, mostly by taking advantage of free movement of labor within the European Union, are now worth almost 2.5% of the gross domestic product of 250 billion euros.

Unemployment goes down, money is injected into the economy, housing is built, and everyone benefits. There are so many young Poles working temporarily in Britain that a Polish university has opened a London campus so people can work without taking time off their studies. Eventually most of those hard-working young people go back to Poland to live in the homes their remittances bought.
posted by pracowity at 3:12 AM on October 18, 2007

It's a pity that the IFAD map doesn't have much on small Pacific states (as well as getting the decimal place on Samoa wrong) because these countries are all increasingly becoming dependent on money sourced from other countries. The tiny Pacific nation of Tuvalu is a great example, where pretty much all of its money comes from remittances, foreign aid, the selling of fishing licenses and of course selling the notable .tv domain.
posted by Serial Killer Slumber Party at 3:45 AM on October 18, 2007

This has been well established for some time as the main reason for apparently low poverty and inequality rates in the Middle East: very high rates of intra-regional migrant labor supposedly tend to spread the benefits of oil wealth around to the countries which don't have oil but send lots of guest workers to countries which do. Examples being Egypt and Jordan, where a significant percentage of the working age men work in the gulf oil monarchies.

While this is all well and good on paper and in theory, a little bit of exposure to social realities (and investigation on the ground) tends to make you question the apparently solid numbers the World Bank economists fling around.

My impression as a social sciences student who has studied some economics is that the data collection methods used by the economists to establish equality and poverty numbers, while relatively appropriate to first-world economies, are entirely inadequate in places like these.

A small example: they measure inequality by a household budget survey: get 20,000 people in Egypt from a mix of social and class backgrounds to fill out a form which says how much they have spent on various products in the past month. You multiply this by percentage of the total population and you get something like gross household spending in Egypt. You divide the spenders into five tiers, and the difference in income between them measures relative inequality in the country. The problem is, when you check the numbers, only about HALF of the total money spent in the economy gets reported in the household budget surveys.

The reason is that the top-tier households, those in the top fifth or tenth of income percentiles, consistently under-report household spending by vast and irredeemable margins. (No one knows why). The result is that inequality as measured by the World Bank surveys is vastly lower than in reality. And it all gets chalked up to Egypt's guest workers in the Gulf. Economics is much less a hard science than its acolytes would have you believe. All this is not to say remittances are not important for many countries, but to cast a little suspicion on the 'hard' numbers.
posted by jackbrown at 3:56 AM on October 18, 2007 [2 favorites]

> The reason is that the top-tier households, those in the top fifth or tenth of income percentiles,
> consistently under-report household spending by vast and irredeemable margins. (No one knows why).

The sensible rich don't call attention to themselves, especially in places of very great inequality.
posted by jfuller at 4:10 AM on October 18, 2007

leaving mostly corrupt greedheads back home

Take my congressperson, please! &lt rimshot &gt
posted by a robot made out of meat at 4:32 AM on October 18, 2007 [1 favorite]

It worked in the live preview :(
posted by a robot made out of meat at 4:33 AM on October 18, 2007

Eventually most of those hard-working young people go back to Poland to live in the homes their remittances bought.

Is there any proof of this? Most of the immigrants I know never go back.

And I'd agree with trinarian. People need to generate wealth in their own countries. The fact that the 10% of the GDP of some of these countries comes from people mailing money to their moms and dads is kind of sad.
posted by chunking express at 6:07 AM on October 18, 2007

I hold her and her ilk responsible for her countries economic and political misfortunes... the talented people book it for better paying jobs without trying to create opportunity back home.

Does that really make sense? You don't seem eager to go to the Philippines yourself, and I'm certainly not. Are people born in low-opportunity areas duty-bound to stick it out, while people who are born in high-opportunity areas get a free pass?
posted by Mr. President Dr. Steve Elvis America at 6:15 AM on October 18, 2007 [2 favorites]

It's not just talented people. For the past two years I've tutored people looking to learn English. One of my students was a Sri Lankan who spent more than 20 years away from home, working minimum wage jobs in America and sending the majority of his wages home. The income disparity between the US and Sri Lanka meant he was able to buy a really nice house in his home country (unfortunately, he can't return until 2012, but that's another story).
posted by drezdn at 6:20 AM on October 18, 2007

trinarian -- I think you're only seeing half of the workforce picture there. There's the 'brain drain' half that you're describing, where the high-skilled and educated leave for lucrative opportunities, which is certainly a problem and one that nations like the Philippines do recognize. But, there's also the other 'blue collar' half which involves relatively low-skilled workers who leave the country temporarily to work as maids, nurses, manual labor, etc. with the goal of saving up enough to go back home with some kind of nest egg and either start a business / buy property / build a university tuition fund.

I mean, seriously, you live in China? Have you ever been to Statue Square in Hong Kong on a Sunday when all the Filipino ya-yas are out on their day off, congregating in the square to gossip, share pictures, sing songs from the provinces and spontaneously crafting a temporary homeland for themselves? You don't think that speaks to a sentimental attachment to a motherland that haunts them in their working days?

This other half cannot start a business in their own country. They are not well connected enough to influence government policy, and they don't have the skills to be teachers. They are mothers who leave behind children so that they can earn enough money to send them through school. They are young men who work on Saudi oil rigs to earn the money that they need to build a family back home. They do plan on going back. The fact that they send remittances back is a strong sign of it. Whether they make it back or lose sight of their goals and fritter their cash away is another story.

But, the fact is that for many of these workers, their host nation treats them as second-class citizens right from the start, which is a strong disincentive from permanent settlement. It's certainly the case if you're working a juicy gig in the Gulf States and even comes up if you've landed in the EU or the US. You don't blend in with the locals and you tend to just fall in with fellow expats, who are all terribly homesick and counting the days until their employment contract / migration debt is paid off and they can go home.

So, no, it's not all swish Global Citizen Expats abandoning their corrupt homeland for tastier digs abroad; it's just that way for some of them. The rest would take issue with your labelling that they're 'responsible' for the problem. They're doing the best that they can.
posted by bl1nk at 6:59 AM on October 18, 2007 [1 favorite]

Some additional links: the LA times had a feature on this months ago

And here's a 2005 UN report on immigrant flows
posted by stratastar at 7:11 AM on October 18, 2007

Whenever I finally get a chance to leave the USA, you can take it to the bank that I will not be sending any money to my "motherland".
posted by triolus at 7:13 AM on October 18, 2007

The Freakonomics blog has an interview with the economist Philippe Legrain on immigration which also touches on these issues. To Legrain allowing free immigration is a moral obligation and a major of that obligation is the fact that these kind of remittances can improve life chances for those back home.
posted by patricio at 7:25 AM on October 18, 2007

Not surprisingly, The U.S. is king in the worlds share of total immigrants. And those immigrants are the least of it's population. I take it this means the US is the most sheepish in granting visas,permits green cards and citizenship.
And triolus, that sentence made little sense. Why you would send money to a rich country? You would be sending chump change If you lived outside the US. In most cases anyway.

I can't fathom why you would want to leave a place which is far and away the biggest economy in the world where the closest economy (Japan) is three times smaller. If you don't value your citizenship I think I know someone who will gladly trade places with you, and he has a bill of goods he'd like to sell you too.
posted by Student of Man at 7:34 AM on October 18, 2007

As a side note, remittances have spawned a huge check cashing industry to exploit serve workers without bank accounts. Walmart is a key player in the remittance market, the banking intermediary of choice for many Mexican workers. They were granted banking rights in Mexico in 2006 - something they have not been able to get here in the US.
posted by madamjujujive at 7:47 AM on October 18, 2007

speaking of ancillary industries, while growing up in Canada (as one of the Brain Drain classes) one of our neighbors was a Filipina-Canadian who ran a pretty slick business specifically oriented around remittance logistics -- basically wire transfer, specialized package delivery and proxy purchasing services.

So, like, if you want to send money back home to feed your family, but you're worried that your alcoholic husband will spend all of your remittance checks on booze, then you can go through her shop to arrange for groceries to be bought in the Philippines and shipped to one's house or be prepared for pickup while paid for in Canadian dollars.

Basically, it's that old adage of -- don't look for gold in a gold rush, setup a shop to sell picks and shovels. But, it was minorly fascinating listening to this woman describe her work and how it was so specifically oriented around the needs and requirements of migrant workers.
posted by bl1nk at 8:02 AM on October 18, 2007

I can't fathom why you would want to leave a place which is far and away the biggest economy in the world where the closest economy (Japan) is three times smaller. If you don't value your citizenship I think I know someone who will gladly trade places with you, and he has a bill of goods he'd like to sell you too.

If you can't fathom the possibility that there are reasons to value (or not) one's citizenship completely independent of the size of a country's economy (or the idea that the US economy is in no way independent of those other, smaller economies), I have a Bill of Rights I'd like to sell you.
posted by poweredbybeard at 8:54 AM on October 18, 2007

I've always been surprised that as part of the Patriot Act (which made it impossible to get a bank account without showing ID), they didn't eliminate no-ID check cashing.

I suspect that WalMart must have exercised some of its pull there, but I wonder how long it can hold out? It seems like requiring an ID check to cash checks or send money via Western Union would be an tempting way to go after illegal workers.

I'm not sure how effective it would be, since those who knowingly employ them would just pay in cash, and probably take the opportunity to pay them even less, but from a political standpoint it seems obvious, particularly since very few American voters probably use walk-up check cashing places or Western Union. (There are lots of Americans who probably do use them, but I suspect many of them are from demographics that don't vote regularly.)
posted by Kadin2048 at 8:56 AM on October 18, 2007

Bill of rights nothing. So would you rather live in dignified poverty?(and I mean 3rd world country poverty), or be idealistically compromised while affluent, have opportunity,and mobility? . Because a majority percentage of the worlds immigrants would prefer the latter.
posted by Student of Man at 9:38 AM on October 18, 2007

Is there any proof of this? Most of the immigrants I know never go back.

The survey reported here says that, while the number of workers intending to stay is on the rise, less than a third of Eastern European guest workers in the UK intend to stay, which I suppose means that more than two-thirds intend to go home.

And these are mostly young and obviously mobile people. I bet a lot of that remaining third also go home as conditions at home improve and they decide to settle down with families and permanent homes. Many are university graduates doing menial work in the UK; a lot of them are likely to want to go back and get a nice white-collar job in their field. And while they may enjoy the single life in London, they don't necessarily want to marry some Jonathan or Emily and raise little Jacks and Olivias in some Birmingham suburb.
posted by pracowity at 12:26 PM on October 18, 2007

a pretty slick business specifically oriented around remittance logistics

Pinoy-grams?
posted by blacklite at 1:09 PM on October 18, 2007

I remember that Nepal's was particularly high, originally due to the gurkhas.
posted by dreamsign at 5:49 PM on October 18, 2007

Like a snake-eating-its-own-tail kinda thing.
posted by Curry at 12:28 PM on October 23, 2007