The Tale of Globalization’s Exiles

Media and government reports focus on hedge funds and other mechanisms of finance that move money around the globe. But individuals also shift funds, including small amounts sent in envelopes or by wire, from immigrant workers in wealthy nations to poor relatives back home. For some poor nations, the total of such remittances outweigh foreign aid or revenues earned from leading agricultural exports or tourism, reports Richard Lapper for the Financial Times. Migrants sent more than $206 billion in known remittances to their homelands during 2006, reports the World Bank. Unofficial or unreported gifts could double that figure, some analysts suggest. Economists recognize that more research is needed to understand the many effects of remittances: inflation of local currency, distortion of import and export prices, poverty reduction, shortages of skilled labor and the creation of a culture of dependency in some communities. The article concludes by suggesting that governments could do more to harness the financial possibilities of such remittances, converting them into long-term investments that could provide steady income for developing nations. – YaleGlobal