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Migration & Refugees

Migration as a Network for Development

Numbers or people? Migrants at Lampedusa. Credit: Ilaria Vechi/IPS

WASHINGTON, May 10 2014 (IPS) - On the eve of a major international conference on migration in Stockholm, a major think tank here is calling on the delegates from more than 150 countries to recognise the importance of migration in forging development policies.

“International migration and development are inextricably linked,” says a statement by the Migration Policy Institute (MPI) in advance of next week’s seventh Global Forum for Migration and Development (GFMD).

The hope is that including migration in the post-2015 goals will generate greater political will and financial resources to address the various challenges faced by migrants.

Through remittances, the money sent from migrants back to their country of origin, and by creating new networks for technology and knowledge, migration reduces poverty and helps improve access to education, according to MPI.

Banking remittances allows recipients to mobilise their savings to earn interest, buy insurance, and build credit.

“After seven years of sending money home in Mexico, I was able to buy a house for my family,” Erick Chavez, a migrant from Oaxaca, Mexico, who lives in Washington, D.C., told IPS.

Its positive effects act on both a micro and macro level, for both countries of origin and countries of destination. Yet this powerful network for development remains widely untapped, the statement asserts.

“Migrants have been instrumental in achieving development goals,” H. E. Eva Åkerman Börje, Secretariat for the Swedish Chairmanship of the GFMD, at a teleconference last week. “But potential gains are left on the table due to poor policies.”

The three-day conference, which will feature discussions among civil-society organisations (CSOs), followed by inter-governmental meetings that will include Sweden’s Princess Victoria and U.N. Secretary-General Ban Ki-Moon, will contribute to the ongoing process of formulating the world body’s post-2015 Development Agenda that will succeed its Millennium Development Goals (MDGs).

The hope is that including migration in the post-2015 goals and creating relevant targets and indicators will generate greater political will and financial resources to address the various challenges faced by migrants, including the costs associated with migration, such as transportation, brokers’ fees, cultural adaptation, remittances, and migrants’ rights to health, education, and fair labour.

“States have come to appreciate the magnitude of migrants’ contributions,” said Börje. “Most directly this happens through higher earning potential and hundreds of billions of dollars of remittances each year which are invested in education, health, and housing, but also through filling needs in the labour market, encouraging trade and skills between markets, and sharing ideas and technology.”

Previous GFMDs have had success in improving national policies, including gaining greater respect for migrants’ basic rights. Some of the key goals at this year’s forum include gaining consensus to reduce the cost of both remittances and international labour recruitment.

Organisers also hope that agreement can be reached on the importance of according recognition by the host countries of the professional skills, training, and education acquired by migrants in their homelands.

Migration also benefits the country of destination, according to MPI.

“Migrants are more mobile than native born workers…so they smooth out some of the discontinuity in the labour market,” Kathleen Newland, director of MPI’s Migrants, Migration, and Development Programme, told IPS.

“Also, there are studies that show a migrant population tends to be correlated with higher trade flows between countries of origin and investment and facilitate FDI (foreign direct investment) in both directions.”

Remittances, a neglected form of foreign aid

Remittances are the main driver behind development fueled by migration. Yet the high costs of relocation, finding a job, and sending the money back home limit their potential benefits.

Erick Chavez had to borrow 3,000 dollars at a steep interest rate in order to get his visa and work in the U.S.

“Back home, I worked 12 hours a day etching designs in stone. It’s very hard work. Here I can make better money…All the money I make here I use to pay my bills, then send the rest to Mexico…I send money about every two weeks through transfers at Western Union. Some goes to help my family, like paying for my brothers’ education. Even elementary school is not really free because of inscription fees,” Chavez told IPS.

Remittances like Chavez’s are an important resource enabling their families to attend school, gain access to health services, and even afford food. The money can reduce individual and household poverty and stimulate local economies to an extent that equals or exceeds the impact of official development assistance.

In 2011, formal remittances to Spanish-speaking Latin American nations totaled more than eight times foreign aid, according to a 2013 report by the Pew Research Center’s Hispanic Trends Project.

Remittances also affect a country’s macro-level economy. In El Salvador, remittances accounted for 16.5 percent of GDP in 2012. Since 2009, the World Bank has included remittance inflows in its measure of national creditworthiness.

“The important effect of remittances on a national level is often overlooked,” said Newland.

“The money comes in as foreign payment, as dollars or pounds, but is received by local people in local currency…. It has a positive impact on a country’s balance of payments and allows a country to borrow international capital.”

Research on improving remittances focuses on two things: reducing their cost and injecting them into the formal banking system.

Newland named “competition, transparency, and technology,” as the keys to reducing the cost of remittances.

“A number of countries have set up websites that show people different costs of services to help them pick the cheapest one and to place pressure on companies to meet the lowest price.”

Another policy suggestion encourages people to use banks to both deposit and transfer their earnings.

“It’s very desirable to get people to send money through formal transfers instead of by hand. Unofficial transfers don’t get counted in macro benefits,” Newland told IPS.

In addition to reaping macro benefits, banking remittances provide migrants and remittance recipients with financial inclusion.

“Basically, being able to formally save [money], own assets, have access to financially affordable institutions, earn more than subsistence wages, manage your funds well are the ingredients for economic well-being and financial independence,” Manuel Orozco,an  expert on remittances at the Inter American Dialogue, an inter-hemispheric think tank here, told IPS.

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