Remittances and International Development

The Invisible Forces Shaping Community

Sabith Khan, Daisha Merritt, Daisha M. Merritt

• Publisher: Routledge
• Year: 2020
• Print ISBN: 9781138344419
• eBook ISBN: 9780429797323
• Topic: Business
• Subtopic: Business General
• Index: Business

This is a first of its kind book which examines the remittances in the two largest corridors in the World: India-Saudi Arabia and Mexico-U.S.A.

This book aims to treat remittances as an act of social norm involving individuals, nation-states, and diaspora communities. It treats remittances both as an act of individual obligation as well as a social fact that needs to be understood from the perspective of the actors, i.e., the givers and recipients. Using theories of motives of giving, policy analysis, international development, and international relations, the authors offer a compelling narrative of how and why remittances occur and the impacts on both the giver and recipient. The authors - both scholars of philanthropy and remittances - bring their shared perspective and understanding of this crucial phenomenon and delve deep into examining its impacts on community development and the relations between the nation-states. This book offers a sophisticated understanding of how vital remittances are to the world we live in.

The book sheds light on this important social reality and will be of value to researchers, academics, and students interested in remittances, as well as to practitioners working in the international development sector, NGO actors, and policy makers.

1
Introduction

Purpose of the Book

“The amount of remittances sent back by migrants is three times the size of International development aid.”

(Hudson Institute’s Index of Global Philanthropy, 2016)

You must have heard this fact stated several times, from the World Bank or many of the think tanks such as the Hudson Institute, which produce research on remittances. This fact, which has become a lodestar for many who advocate individual action, is not intended to discourage international aid from the U.S. Despite the cuts to aid from the U.S. since the election of Mr. Trump, we remain, albeit with less influence, a major donor internationally. Americans have given over $400 billion in philanthropy to causes ranging from children’s education, healthcare, post-disaster recovery, etc. Remittances sent by migrants support many of the economies that are recovering from a disaster or war. They are the lifeline that sustains families.

This book brings together some of the emerging ideas and debates in remittances from multiple perspectives. It is a synthesis of existing research as much as it is taking a step further in theorizing what remittances mean to the senders and receivers and also what impact they have on communities. We aim to offer a synthesis of existing theories of remittances and a clearer narrative of remittances. Given the overall scope, collection from various data sources, and rich discussion contained within this book, we believe that the reader will find the content fresh and valid, spurring further research and discourse on remittances.

While an ever increasing amount of quantitative data is being generated by the World Bank and its affiliates around the world, one can see that there is not a lot of theorizing about this phenomenon. There are few agencies or scholars who are asking how migrants, remittance senders, are making sense of this phenomenon and what long-term impact remittances have on their families, communities. In addition there is also not a lot of focus on the externalities of remittances—both positive and negative. As observers and participants in this phenomenon of remittances, we are intrigued by what all of this means—to the participants and their communities back home. We are also aware of scholarly analyses of some negative externalities of remittances, but wanted to delve deeper into the nuances of this phenomenon.

Serendipity and conversations with individuals working in this space has as much to do with this book as a deep interest in understanding migration and its impacts on remittances. We are both scholars of philanthropy and remittances. Our initial theorizing led to a paper which we have included in this book.

The Untold Story of Remittances

Existing scholarly work on the subject of remittances is not read widely. Policy-related documents are read by practitioners and scholars who study policy issues and often end up in some news reports. We believe that there is a need for both the practitioners-produced literature on remittances such as that emanating from the World Bank and think tanks (CEMLA in Mexico City, etc.) and existing academic research to help us understand this multifaceted phenomenon.

What we have attempted in this book is to tell a more complete story of remittances. While data from financial institutions and statistics may illuminate and point out the ups and downs of what is going on in terms of employment figures, remittances flow, and the like, the numbers are not able to capture the why of a phenomenon. We are particularly interested in why something happens—in the case of remittances—and for this, we have sought to build on the narratives. To achieve this, we referenced various forms of data including qualitative, observational, and quantitative. We have been agnostic as far as a particular leaning, in terms of methodology or the kind of data gathered.

As Steve Almond points out in his book Bad Stories (2018),

stories are the basic unit of human consciousness. The stories we tell and the ones we absorb, are what allow us to pluck meaning from the rush of experience. Only through the patient interrogation of these stories can we begin to understand where we are and how we got here.

(Almond, 2018, p. 6)

Almond goes on to explain that it is “hard to be a human being because humans have anxieties and unmet desires that we are trying to manage” (p. 6). He suggests that one way we do this is by telling stories that help us manage and endure our feelings, which tell us not to be ruled by our worst impulses. We are in other words, trying to tell good (and more comprehensive) stories of remittances.

The story of remittances, we believe, has not been told comprehensively. While annual reports from think tanks and similar agencies offer number crunching and an analysis of trends in remittances, they do not offer a comprehensive picture of the context of why remittances are the way they are. In other words, the narrative of remittances is incomplete. While we are not suggesting or implying that these existing stories of remittances are false by any means, we certainly argue that they are incomplete.

Our modest attempt has been to add to this narrative meaning the missing pieces, to synthesize the theories and data, toward making this narrative complete. We suggest that a more complex and nuanced narrative is needed to understand the phenomenon of remittances. Taking a longer view and using a multi-disciplinary lens is crucial for this complex narrative to emerge.

The State of Remittances: An Introduction

The World Bank offers fairly comprehensive data at the national level. However, this data only captures the estimates from known and official channels of remittances such as through banks, remittance transfer companies, etc. However, as many scholars have pointed out, this is not the complete picture. With a sector where 90% of the transactions take place in cash, it is hard to make a claim that this data would capture all, if not most of the remittances sent.

We approach any data source with some skepticism knowing these facts and while also being aware that the narrative of remittances is far more complex than what any one source can offer. This humility and awareness of the limitations of what data tells us is crucial for building a more comprehensive understanding (see Table 1.1).

Table 1.1 Estimated remittances from the United States, 2010-2018 (Estimated, Billions of U.S. Dollars)

	2010	2011	2012	2013	2014	2015	2016	2017	2018
Mexico	21.69	23.17	22.81	22.59	24.00	24.32	28.10	30.02	34.70
China	11.40	13.31	13.07	15.15	15.85	16.25	15.41	16.14	14.52
India	9.37	10.86	11.96	11.11	11.19	10.96	10.66	11.71	12.73
Philippines	9.33	10.00	10.60	9.08	9.65	9.68	10.54	11.10	11.42
Vietnam	4.70	4.88	5.68	6.22	6.81	7.45	6.68	7.73	8.33
Guatemala	3.78	4.03	4.40	4.87	5.28	5.98	6.76	7.72	8.49
Nigeria	5.92	6.14	6.13	5.73	5.74	5.67	5.67	6.19	7.28
El Salvador	3.09	3.29	3.56	3.63	3.87	3.99	4.19	4.61	4.87
Dominican Republic	2.71	2.87	2.73	3.34	3.58	3.83	4.09	4.59	5.05
Honduras	2.30	2.50	2.58	2.74	2.94	3.26	3.37	3.77	4.06

The World Bank estimates show that remittances are on an upward trend, having reached over $500 billion USD (see Table 1.1). This increase can be linked to increased economic growth in the United States and also a rebound in infrastructure from Russia and some Gulf Nations (World Bank, 2019). To further emphasize the increased flow of remittances in low- to middle-income countries, money transfers have become the largest source of foreign monetary exchanges, surpassing foreign direct investment (with the exception of China).

Within the context of this book, we focus on the inflows of remittances. Our targeted discussion and analysis is offered using USD currency. And we discuss money transfers as whole dollars as well as a percentage of GDP. Given the domestic U.S.A. lensing, we offer data on United States remittance outflows. And from available 2017 data, the United States remains the largest contributor to remittances, recording $68 billion USD in remittance outflows. To further emphasize the amount of monies recorded that flow from the U.S.A., the next highest contributors are the United Arab Emirates and Saudi Arabia, at $44 billion USD and $36 billion USD, respectively. There seems to be a tie between economic growth, migration, multinational enterprises and ventures and remittance flows.

What Trends Are We Seeing Around the World?

There are some trends that stand out to us, as we look at the data emerging from the countries we examine (see Table 1.2). For one, there has been an increase, not decrease of remittances. In the case of Mexico, there has been an increase in remittances reaching Mexico, despite there being a fall in the number of migrants coming to the United States. Scholars and observers of Mexico point out that this could be due to the fact that the quantity of remittances have increased over the past few years, despite stricter enforcement of immigration laws and a general fear of migration among youth in Mexico, who are more likely to make the trek to the U.S.

Table 1.2 Ten largest remittance corridors, 2018

Sending Country	Receiving Country	Remittance Estimate ($billions)
United States	Mexico	34.7
United Arab Emirates	India	18.53
Hong Kong	China	16.34
United States	China	14.25
United States	India	12.74
Saudi Arabia	India	11.67
United States	Philippines	11.43
United States	Guatemala	8.49
United States	Vietnam	8.33
United States	Nigeria	7.27

Source: The World Bank. 2018 Bilateral Remittance Matrix

Remittances flowing into India have seen a significant rise over the last year. India is the top recipient of remittances worldwide, reaching over $78 billion USD in 2018 according to the World Bank. These monies come from a variety of diaspora Indian migrants, concentrated in the Gulf region, U.S.A., UK, and Canada. Interestingly, India received more than 50% of its total remittance from the Gulf region. Remittances play an integral role in the economy of India. Recent increases in remittances to India may also be linked to humanitarian aid, for example in the recent floods in the southern Indian state of Kerala, outpouring of disaster relief aid may account for some of the increase to remittance inflows in India.

Overall, remittances are on the rise and further predicted to increase steadily. However, public policy ventures and proposals also play an integral role in shaping the current state and future of remittances. The policy that surrounds the private transfers of money is not standardized nor are they limited to ...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Dedication Page
• Contents
• List of Figures
• List of Photos
• List of Graphs
• List of Tables
• Acknowledgments
• Foreword
• 1 Introduction: Purpose of the Book
• 2 Motivations to Send and Receive: Background
• 3 Growth of Money Transfers: Theorizing Technology, Distance, and Money
• 4 Remittances by the Numbers: How Much Is Sent and Where
• 5 Policy and Remittances: Human Needs and the Shaping of Practice With Policy
• 6 Discourse of Remittances: How It Shapes Praxis in India, U.S.A., and Mexico
• 7 Case Study: India as a Receiver
• 8 Remittances and the Persian Gulf Nations
• 9 Remittances as Subaltern Giving: The Case of Mexico
• 10 Remittances as ‘Soft Power’?: Examining the Power of Money-Flows Between Communities and Nation-States
• 11 Conclusion: Forces Shaping the Future
• Index