Migration and Remittances: A Case Study of the Caribbean
We also note that very little empirical work has been done to evaluate the contribution of remittances to economic development. The collected data has been used to estimate balance of payment flows and not to ascertain local Income generation and no distinction Is made between current and capital remittances. According to the economist (2007) global remittances in that year reached $318 billion up from $1 70 billion in 2002. The majority of these remittances go to developing countries and the largest recipients are Latin America and the Caribbean.
The Concept of remittances The transfer of earnings or accumulated wealth to the origin country of migrants is known as remittances. This is viewed as a source of support for dependents, repayments, investments etc.
The fact that remittances are transferred with a set of instructions about their disposal it is difficult to apportion these amounts into current or capital accounts. Whap (1991) provides a taxonomy of remittances which divides remittances Into four types. 1 . Potential remittances: this is the maximum a migrant can transfer at any time minus expenses. 2.
Fixed remittances: this Is the minimum necessary to satisfy family needs and other obligations. 3. Discretionary remittances: this Is the excess of fixed remittances. 4. Saved remittances: the difference between the potential and the actual amount during the period.
This remittance is accumulated into a stock of resources to accumulate wealth. Migration and Remittances The concept of migration and remittance cannot be separated as the issue of remittance only arises because of migration. Therefore the analysis of remittances and the analysis of the factors which motivate migration provide part of the fixed maintenance rational.
Lucas and Stark (1985) divide this theory into 3 groups. 1. Pure altruism: the migrant derives utility form fulfilling the needs of the household In the origin country.
2. Pure self-interest: this takes Into consideration the portion of the family wealth that would be left to the migrant. Secondly the buildup of assets land, property etc and the family as agents and thirdly the Intent to return home and having something to look forward to this as aspects of pure altruism and self-interest motives. I mainly ten tempered altruism or enlightened sell-lanterns t.
Nils Is Dates on mutually beneficial contract between the family and the migrant where the family invests in their education and repayment is done by remittances.
The Structure and Performance of the economy The theories of enlightenment altruism include (1) a high ratio of agriculture to GAP is associated with higher rates of migration. Insurance is greatly needed as agriculture income is more variable or risky. (2) Industry decline leads to less Job opportunity hence migration. (3) Economic downtown in the host country will reduce remittances but can be offset by a draw down on accumulated wealth. 4) Natural starters in the origin country will force an increase in remittance flow.
Education Higher migration levels for more educated household members would have better income prospects and greater remittance levels. This also means more implicit repayments to the family who invested in their education. Other (1) Positive relations between remittances and family size (2) Younger migrant’s prospects of remittances are higher and also repayment of investment follows suite. (3) Remittance decline with the duration of time abroad but do not cease. 4) Female remit more for family care but males with assets will remit more to maintain favor. Trends in Migration in the Caribbean Augment (1993) reviewed Caribbean migration trends and estimated from 1950 – 1990 some 5.
6 million people migrated. This represented 16% of the region’s population in 1990 or 32% in 1950. Also 1. 4 million occurred in the sass’s and 1. 7 million in the sass’s.
The highest amount of population migration came from the countries with the larger population namely Jamaica and Haiti. Then 1 million each from Puerco Rice, Cuba Dominican Republic and continues to descend.
The smaller Caribbean islands such as Dominica, Grenade and SST. Kits experienced asses equivalent to 80% of population in the ass’s. The weighted rate of migration loss throughout the Caribbean was 62% in the ass’s for Carom countries and 32% for the wider Caribbean.
The major nations for migrants were the US, Canada and European countries. The migration process had a colonial element to the European migrants as they tend to migrate from Francophone Caribbean to France, Dutch speaking to Holland and English speaking to England. The North American migrants did not have this pattern of migration.
Intra Caribbean migration was miniscule compared to extra Caribbean migration and counted for 1% of the total Caribbean population in the 1980 and 7% in 1950-1980. There are 3 factors of intra-regional movement of people. 1.
The majority of intra- regional migrants originate from Haiti and Eastern Caribbean (doom. Rep. , Cuba, Grenade). 2. The outflows are directed towards Dominican Republic, Puerco Rice, T&T Bahamas etc.
3. The migrants have specialized or distinctive educational occupational profiles and income that suggest they play a unique role in the economic development of that country.
According to Simmons and Augment (1992) the reasons for intra- Caribbean migration to the following islands are, for Bahamas s its high standard of living based on tourism and offshore financial services and is a target for Jamaican, Haitian and Turks and Cacaos. Migration to Cuba occurred before the Second World War for sugar harvesting and other professional business purposes they attracted Jamaican and Haitian. The Dominican Republic attracted Halt agricultural workers.
Puerco RICE attracted Dominical Repelled Ana Halt migrants who were seeking industrial and urban Jobs.
Barbados is a preferred destination for regional educational and commercial institutions among Carom countries. Another example is Trinidad & Tobago and its petroleum sector attracts migrants from Grenade, Guyana and SST. Vincent & the Grenadines. According to bicarbonate. Com (2007) the author highlighted that the Caribbean countries profit from large remittances sent back by highly educated migrants and that we are accustomed to exporting people to Jobs.
The Magnitude of remittances Data on remittances was obtained from the published Balance of Payments for the Eastern Caribbean Central Bank SPEC (1999), Barbados balance of Payment (1999). The remittance figures comprises of worker remittances, migrant remittances and there current transfers. Remittances differ will differ from country to country depending on the situation. This process is however not complete as there are unofficial methods or channels through which remittances are transferred. The level of migration versus the level of remittances is very low.
However this is not the case for all countries as Jamaica and the Dominican Republic have the highest returns of remittances with IIS$600 million and IIS$846 million respectively.
On the other hand Bahamas, BI, Surname and Trinidad and Tobago had negative flows of remittances even though their population outflow is at a significant, the inflows are small. It is suggested that the recognition of outflows on the Balance of Payment is easier as it is a liability and the inflows are not easily identified.
An article in the economist (2009) states that the financial lifeline for a number of Latin American and Caribbean countries, and in several cases represent the equivalent of as much as one-fifth or more of GAP. Migrant transfers represent nearly 25% of GAP for Honduras, 20% for Haiti, 19% for Jamaica, 18% for El Salvador and 11% for Guatemala. The Contribution of Remittances to Development This depends on the uses to which the remittances are put, if resources are used for conspicuous activity then there will be no development in the economy. High import levels also negatively affect Balance of Payments.
The reverse says that if resources are used for investment and to improve the health and productivity sectors this will positively impact economic development directly or indirectly. Remittances directly contribute to economic and social development by improving the living standards of the recipient. This is seen by an increase in the consumption level and increased opportunity for higher education for the household. Another logical activity of the flow of remittances to poor households is that it improves the distribution of income in the society.
Also the investment of remittances in new businesses or expansion projects accounts for or contributes to economic development.
Finally the foreign exchange provided by flows of remittances permits the importation of capital goods and raw material necessary for economic development. According to BBC. Co. UK/news/business an article by Davis (2012) the global recession also hit remittances hard, with people being able to send less back to the island. MIT Gordon Burke Green, who works for Swift Cash, one of the island’s remittance agencies, says: “We had growth up to 2009 but then it took a dive.
There has been incremental growth because Jamaican people overseas are always sending money home.
Even if they go without, they’ll always send something for their people ere ” Measures to Improve ten now AT Remittances. 1 . The money transfer mechanism: such as western union and money gram provides a safe and convenient way to remit from the US and other countries to the Caribbean. This mechanism also allows for the tracking of inflows to the Caribbean. 2. The exchange control regime: the more liberal the region is the less likely for FAX hoarding and more supply will be accessed.
. More attractive rats from financial institutions to migrants for saving remittances. 4. Government should consider offering similar tax breaks enjoyed by foreign investors to migrants investing in local securities. 5.
Establishing financial institutions in the host country, this can provide easy access to migrant resources than making expensive transfers. 6. Developing an efficient domestic money and capital market to attract large portfolio investment through which international capital flows. . Credible macro-economic policies to ensure low inflation and stable exchange rate.