India is the biggest net beneficiary of money sent home by migrants:
Officially recorded remittances worldwide exceeded $232 billion in 2005, with India receiving almost 10% of the amount ($21.7 billion). China came second with $21.3 billion, followed by Mexico ($18.1 billion), France ($12.7 billion), and the Philippines ($11.6 billion). [Link]
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p>To put this into context, remittances worldwide are roughly the same as the GDP of Sweden, and remittances to India are roughly equivalent to the entire national output of countries such as Latvia or North Korea. India makes even more foreign exchange from sending its workers abroad than it does from exporting software.[Thanks Hammer_Sickel!] Remittances to India are roughly equivalent to the entire national economic output of Latvia. India generates more foreign exchange from sending its workers abroad than it does from software exports.
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p>International flows of labor are now becoming economically critically, like flows of capital in the decade before before:
… remittances sent through informal channels could add at least 50 per cent to the official estimate, making remittances the largest source of external capital in many developing countries. [Link]With the number of migrants worldwide now reaching almost 200 million, their productivity and earnings are a powerful force for poverty reduction. [Link]
It is argued that remittances play an important role in poverty alleviation because they go directly to people rather than to governments. This allows them to benefit families directly, unlike foreign aid, with little in the way of overhead being charged by the state. Remittances are also counter-cyclical, and so serve as an important form of social insurance.
However, remittances are used to fund consumption more than investment, which conditions their impact on poverty. Furthermore, in countries where remittances are coming from brain drain, the money goes to the elites within society, i.e. those who need it least. Remittances go to help the poor only in countries which export their poor such as Mexico which earns more foreign exchange from remittances than agriculture. Lastly, these large flows of remittances may be the artifact of relatively recent immigration:
An analysis of the 2000 US census reveals that of the foreign population in the United States in that year, nearly half (47%) entered the country in just the previous decade. [Link]
As immigration regulations are tightened, existing migrants may start to send back less money over time and remittance flows may lessen. In that case, this surge in remittances may prove to be the result of a post-Cold War temporary opening in borders, and not something that poor countries can rely on long term.
Holy shit. This is straggering. There is a lot of “off the books” bartering going on among the upper class businessmen between India and the US as well. Not necessarily direct flow of money. Diamond dealers and Garment industrialists especially. Add that to existing methods of remittance and India is on the receiving end of some seriously flow of dough from the United States.
And remittances to India is greater than the total software export from India!!
Another scenario can be that as immigration rules are tightened people may send more money abroad, because their family is back home and the immigrant decides that its better to save as much as possible and move back to be closer to family. In that case he wont make any longer term investment in the host country b/c he doesnt want to put roots down.
Scaling for population France with a population of 60.6 million beats them all!
GGK – agreed, but what happens once that crop of immigrants leaves and new ones can’t come in? In 20-30 years, remittance flows might be much smaller. I’m just laying out a few alternative scenarios.
but what happens once that crop of immigrants leaves and new ones can’t come in? In 20-30 years, remittance flows might be much smaller.
But how realistic is this scenario? We know that the entire Western world–with the exception of the Latinizing, highly Christian United States–is precipitously shrinking thanks to low birthrates. We also know that it is unlikely the Arab world will be able to provide the professional services needed to tend to their swelling populations (in medicine and nursing, eg.).
Perhaps Europe should import Indians and Chinese rather than Arabs–they will integrate better. Manmohan Singh recently lobbied Germans to ease restrictions on professional visas.
India and China will need to population shed for the forseeable future too.
The money flow should continue for the next generation. My guess.
India and China are growing faster than the west, and India will soon have labor shortages in some key industries, rasing wages at home.
Also, your argument works best for professionals rather than working class migrants. Working class migrants contribute heavily to poverty alleviation. The H1-B club have less of a need to send money back home and sending money back to the elite has less impact domestically.
yes i agree, such measures may cause remmitance to peak quickly and slow down.
There’s also an economic incentive to send/invest savings in India; the decling dollar. The US dollar has been losing strength and will continue to do so and so I predict that dollar inflows will rise.
One Indian software firm employee I met here in the US told me that he suffered the worst kind of racist shit when he was in Europe. He feels that difference between US and Europe in this terms is that of night and day.
Remittances on this scale are an indication of the strong family cultural ties of the country or culture where it is happening. Of course it also constitutes capital formation, though I think the money is more spent than invested. It’s also important to know if savings saved within India is invested inside or outside the country, on a net basis – a sign of whether the investor class has confidence in the future. Russian capital “flight” is a major reason for Russia’s ongoing failre, even collapse. Clearly India has avoided this problem.
Yes, the focus on America’s very real imperfections in race relations tends to permit the impression that Europe is racism-free, when it should begin to be clear, following the French explosion, that much of Europe is racist down to its toes.
Yes, the focus on America’s very real imperfections in race relations tends to permit the impression that Europe is racism-free, when it should begin to be clear, following the French explosion, that much of Europe is racist down to its toes. e
Without question. I am really stunned by the amount of anti-Asian sentiment/racism in the UK. Perhaps it has something to do with colonization- the my grandfather owned your grandfather mentality still just below the surface there. In the Northeast of the US, I can’t remember the last time I got slurred with a racialist comment. Even right after 9/11.
The safest place for a brown to be after 9/11 was New York City!
By no means is this limited to software firm employees. I have a couple of relatives who are doctors (very very smart doctors, may I add), and they were constantly humiliated in the UK by racists of the worst kind. They went back to India after a few years. If they had managed to come to the US, I am sure they would have been very successful.
M. Nam
I haven’t been back to London since the recent bombings, but in general a lot changed in the 1990s. Before then, sure the US was far more hospitable to brown people. Since … it’s unclear. When I was in London in 1999 (ages ago, granted) people thought I was British and treated me as a local. That had never happened to me before. And when I travelled, the year afterwards, young Brits would see me and get excited that they had found another fellow British traveller … whereas Americans would look right through me as if I wasn’t even there. So even in the pre-9/11 world, the UK was more hospitable than the US in some ways.
A drunken old man muttered a racist epithet at me late one night in central London. I hadn’t seen that in the U.S. since the Gulf War. But then it was a drunk.
Shit man, taxi drivers wouldn’t stop for me in SF in the early 90s, and that was SF. I’m the last person to minimize UK racism – I saw it and it stopped me from loving England for a very long time. But still , let’s not minimize the baseline level of epithets in either country.
Maybe it was in vino veritas.
An eighteen year old beer-addled fratboy, after a rousing Fall football game, called out “Taxi” as our perfectly respectable black Mercury was pulling out of the garage. His friends laughed. We honked back indignantly. We had been cheering for the same team.
This is in what is considered to be the liberal center of Texas.
Hey, you’ve got it easy compared with me. At least that was a joking put down rather than a threatening one. I can’t say that middle America is terribly enlightened.
SF Taxi drivers never stopped for me either, the whole 11 years I lived there. That’s because SF taxis aren’t really taxis, they’re car services – you have to call them in advance, and if they’re going somewhere on a call (as they always are, since there’s a severe taxi shortage in SF) they won’t take passengers, even if they’re empty.
SF is much more racially segregated than its hip reputaion lets on, but that’s not the reason the taxis passed you by.
I went to an international school in South America while my dad was on an expat assignment…the British expats were much friendlier to me and understood me way better than the Americans (who just thought “brown” and assumed me to be a local without even bothering to talk to me- even if they did they asked me why I had such an American accent). Most of my friends turned out to be British or Canadian.
I think the brit. racism is more from the working class, those who have to compete with desi immigrants for menial jobs and see us as some kind of threat.
I lived there at the time, and in my neighborhood they did stop.
I once had a similar problem when I called a cab. I needed to fly east for my grandfather’s funeral, but the taxi I had called wouldn’t stop. I called the dispatcher, who was rude, said I hadn’t been there, and refused to send another taxi. I had to wake my roomate up at 6AM and ask him to drive me, or I would have missed my flight.
? Now I have to ask – what neighborhood? Curious, that’s all. I suffered cab trauma in the Castro, the Haight, the Mission, and Noe Valley.
Tell me about it. I’ve had the same thing happen to me (cab from company I called drove right past me – with the driver looking me in the eye no less!). That’s why I eventually learned, on those increasingly rare occasions I absolutely had to resort to a taxi, to call several taxi companies at the same time, and take the cab of whoever stopped for me first (if any of them stopped, or showed up in the first place). Yeah, they hate that, but it’s their own damn fault for being so rude and mismanaged.
Your comments make me realize that if I weren’t white, I’d naturally assume that was the reason I had so much cab trouble in SF. I should add that all my SF cab experiences (and lack thereof) are from 1991 to 2002. I have no idea if the SF transit nightmare has changed since then.
Cabs aside, racial tensions (especially black-white-hispanic) always seemed high in the Bay Area, especially compared with New York, which is almost utopian in comparison.
In the wealthier, whiter neighborhoods north of Mission you could often hail a cab New York style, just by sticking out your hand. I lived not far from an intersection where taxi drivers congregated, and so it was routine to see people flagging taxis down as they left the area around this donut shop.
Nina – in the case of the funeral, it was 5:30 in the morning and I was the only person on the street. I’m over 6 feet tall, and I had a suitcase. The driver, having come out to my neighborhood, presumably wanted a fare and there was no other fare around.
I have trouble not seeing his actions (and the rudeness of the dispatcher) in racial terms. Drivers like passengers going to the airport, he had no other prospects, and I was clearly visible. What other reason might fit his actions?
My point to Manish was that some racism in London from a drunk doesn’t surprise me, given my treatment in liberal SF (which yes, had far far worse race relations than NYC did in that era).
Although remittances have been recognized as increasingly important in developing countries, the big question for me is how to channel them to further development in India.
It was mentioned that a larger portion of remittances to India go to the middle/upper class and that much of it is spent on consumption. Perhaps the Indian government should create incentives to promote the investment of this money. Does this already happen?
Also, I believe that a very large portion of the remittances received by India go to Kerala. I am not exactly sure why, but I would guess that among the relevant factors are links to the Middle East, and the high rate of education.
There seems to be a link between remittances to the education system in a place like Kerala, or Begal (i.e. those due to brain drain). But the political atmosphere that created exactly the social capital responsible for those remittances scares away foreign investment. So where can these remittances be invested?