Role of Migrant Remittances to Development - Essay Example

Role of migrant remittances to development Role of migrant remittances to development Migrant remittances refer to the amounts of money that people who have migrated from their home countries send back home. Despite migration to international countries being deemed as brain drain to home by many (Adams, 2005, P. 1), research shows that migrant remittances from those who have moved have outstanding impacts on the development of their home countries. With the rate of migration increasing as days go by, the inflow of remittances also increases causing an enormous impact on the economy of developing countries (Vargas-Lundius, Lanly, Villareal & Osorio, 2008, P. 14). The contributions made by international migrant remittances to development include; Reduction of poverty in the developing countries (Adams JR. & Page, 2005, P. 1647); middle and low class earners in the less developed countries are able to receive higher incomes through remittances from their relatives who live in foreign countries. The standards of living of people who earn low incomes are also improved due to availability of remittances. Individuals are also able to obtain assets using the remittances and they can also invest in the money thus improving the economy of their country as a whole. With the investments, more employment opportunities are created. Thus, with more people being employed, the economic growth of the home country will be higher leading to an increase in the per capita income (Adams JR. & Page, 2005, P. 1649). Research shows that most of the families who have access to migrant remittances in Zimbabwe experienced 91% food security and 76% security in terms of medicine and medical treatment (Tevera & Chikanda, 2009, P. 20). Impact on Agriculture; Research shows that migrant remittances contribute significantly to the agricultural industry of developing countries. Haas refers to this as an indirect benefit which is realized through migrant remittances (Haas, 2007, P. 16). As much as it is argued that migration reduces the number of people available to provide farm labor, with migrant remittances this is fully countered and in turn there is a positive impact on agriculture. The people who receive migrant remittances are able to hire even more skilled farm workers than the ones who migrated (Vargas-Lundius, Lanly, Villareal & Osorio, 2008, P. 32). They can also be able to invest in current technology and use of heavy machinery to increase their farm yield. In countries such as Ghana and Albania, it has been proven that though with a high rate of migration, the agricultural industry has not been affected due to the availability of remittances. This is because, with the help of migrant remittances, the countries have embraced time-saving and efficient farm technologies thus increasing their farm yield. Developing countries are known to be very poor in industrialization. Thus, many of them depend on agriculture as the main source of national income. Since migrant remittances lead to the development of the agricultural industry, they will consequently lead to the overall development of home countries as a whole. Impact on health and education: migrant remittances have led to the development of education in the home countries. Poor families are at least able to send their children to school using the money obtained from migrant remittances. Thus, the number of educated people in the society increases significantly and the level of child labor in such countries is also greatly reduced (Ratha & Xu, 2008, P. xii). This leads to the development of the country since it will not have to acquire qualified labor from foreign countries but will have its own. Indeed this is development. The health of people is also greatly affected by migrant remittances. Poor people who previously could not get access to health facilities due to lack of money can now get such services with the aid of migrant remittances. In addition, poor living conditions which could put the health of people at risk are improved by the use of cash from migrant remittances. Thus, the level of health problems such as communicable diseases is greatly reduced. Consequently, the mortality rate in a country is reduced and people can hence participate more in the economic development of their country thus leading to an overall development. Migrant remittances also contribute to the development of a country through reduction of foreign exchange shortages in the economy and offsetting the balance of payment deficits (OECD, 2005, P. 27). Scholars also have noted that migrant remittances have a greater impact on balance of payments than foreign financial aids and direct investment loans. This is mainly due to the fact that, unlike financial aids and investment loans, migrant remittances are not tied to particular investments. Owners can hence invest their money in different profitable businesses without any restrictions. With a constant flow of remittances, several countries also reported that at no one time did they experience a shortage in their foreign exchange reserves (Romano, 2009, P. 1). The countries were in turn able to participate in foreign exchange trade effectively without fear of running short of foreign exchange currency. This ensures that export and import trades of a country are performing well hence leading to its development. The countries also reported a surplus in the balance of payment due to the continuous flow of migrant remittances. This is because they increased savings, private consumption and investments. Impact on the level of entrepreneurship of a country; economists in the less developed countries provide that the number of entrepreneurs in a country increase with an increase in the number of individuals receiving remittances in the country. Many of the rural individuals who always desired to open their own businesses but were limited by the lack of money could now succeed with the help of migrant remittances (Ozden & Schiff, 2007, P. 153). The borrowing constraints experienced by many individuals also came to a stop with the accessibility to migrant remittances. The economy of the home countries would hence be characterized by a lot of business entities meaning the amount of business income produced in the country would be high thus contributing to the general development of the country. Formation of transnational communities as a result of migrant remittances; these refer to the coming together of both migrants and non-migrants and engaging in political, economic and social practices which lead to development of the local community (Vargas-Lundius, Lanly, Villareal & Osorio, 2008, P. 37). This is whereby the money send as migrant remittances is specifically used for creation of better opportunities in the society leading to socio-economic development in the country. The migrant remittances in this case are brought together to create a pool of funds which is used to support social and economic projects in the community. Social amenities such as health care centers, infrastructure and schools have been built in the society with the use of this money (Vargas-Lundius, Lanly, Villareal & Osorio, 2008, P. 38). This significantly contributes to the development of the country and also upholds equality among the people. This is because, with the projects established, all the people in the community are able to enjoy the benefits in spite of the fact that they do not have a migrant person in the foreign countries. Researchers have noted that migrant remittances also lead to the technological improvement of a country. This is because, migrant remittances not only involve money but also gifts in kind. These refer to items such as electronic equipment, machinery and other communication gadgets. Most of these are usually of a high value due to the high technological know-how used to make them. It is hence through these that many forms of technology reach the developing countries from the rich countries. The technology is then applied in businesses, firms and industries thus developing the business and economic environment of the whole country. Consequently, the rate of economic growth will increase appreciably leading to development in the country as a whole. Indeed remittances are of a great help to countries that are still in the process of developing. They provide a stable source of income and capital to the countries’ citizens. The money flowing into the countries can be applied to different uses such as consumption and sustenance of families, investment in economic activities and stabilization of the monetary economy of the country in general (OECD, 2005, P. 268). The bank industry that carries out the transactions of transferring and converting the foreign currency into local currency also benefits in terms of profits. Many people have also their living standards changed and improved due to the constant supply of money. Some of the developing countries such as India, whose economy has been known to be unstable due to a poor financial situation, have really benefited from migrant remittances. The problem of inequality was however noted to be vast in such countries due to the fact that only those with relatives in foreign countries mostly benefit. Transnational communities had also not yet been embraced in such countries and thus community inequality was indeed a problem. Despite all these the country still enjoyed development opportunities from the few people who generated income through investing their migrant remittances in viable economic opportunities. In my opinion however, despite all the attractive benefits obtained from international migration, we must not overlook the predicament of brain drain which comes with migration to foreign countries. References Adams JR., R. S., & Page, J. (2005). Do International Migration and Remittances Reduce Poverty Developing Countries. World Development, 33(10), 1645-1669. Adams, R. A. (2003). International Migration, Remittances, and the Brain Drain. Washington DC: World Bank Publications. Haas, H. (2007). Remittances, Migration and Social Development. OECD (2005). The Development Dimension Migration, Remittances and Development. Canada: OECD Publishing. Ozden, C., & Schiff, M. W. (2006). International Migration, Remittances, and the Brain Drain. New York: World Bank Publications. Ratha, D., & Xu, Z. (2008). Migration and Remittances Factbook 2008, Woshington DC: World Bank Publications. Romano, M. K. (2009). The Impact of Migrant Remittances on Economic and Social Welfare in Municipalities of El Salvador. New Jersey: ProQuest. Tevera, D., & Chikanda, A. (2009). Migrant Remittances and Household Survival in Zimbabwe. Canada: African Books Collective. Vargas-Lundius, R., Lanly, G., Villareal, M., & Osorio, M. (2008). International migration, remittances and rural development. Sweden: International Fund for Agricultural Development. Wright, K., & Black, R. (2011). international migration and the downturn: assessing the impacts of the global financial downturn on migration, poverty and human well‐being. Journal of International Developement, 23(10), 555-564. Read More