Remittances & Development

June 24, 2015

This resource uses maps, a video and texts to provide an understanding of the financial flows of migrant remittances. Its goal is to encourage students to think critically about the multiple impacts of remittances on sending communities.

This lesson addresses state standards:
VI. ECONOMICS D. International Economic Relationships: The student will understand the key factors involved in the United States' economic relationships with other nations.

Introduction

Financial remittances, money sent home by migrants, have received much recent attention as potential, but currently undervalued, development tools by organizations such as the Inter-American Development Bank, World Bank, United Nations and national development agencies. This attention has been partially driven by a continuous increase in the magnitude of remittance flows. For some migrant-sending states, remittance incomes have even exceeded official development assistance and foreign direct investment. In comparison to other financial flows, remittances are lauded for their stable and counter-cyclical characteristics, and their potential to increase incomes and provide funds for investment. In fact, they are even being proposed as innovative financing mechanisms to help countries meet the Millennium Development Goals.

However, scholars have been debating the role that remittances have in spurring development for several years and their studies have largely yielded conflicting results. Although remittances may increase incomes, they may also foster increased inequalities between migrant and non-migrant households and communities. Moreover, remittances used for household consumption, or for education expenses, do not necessarily facilitate sustainable economic growth in sending communities. Instead, a reliance on remittances may perpetuate migration instead of eliminating the economic rationale for migration. Alternately, remittances may provide ethnically marginalized groups with the finances to improve their positions and to challenge existing hierarchies. Women may also benefit and become empowered by receiving financial remittances, but as migrants they may also experience distinct gendered pressures to send remittances. The impacts that financial remittances have on sending households, communities, and nation-states, are far from being unequivocally positive. Instead, financial remittances have complex social and economic implications. Financial remittances are clearly shaping migrant sending communities in significant and multifaceted ways, making it difficult to extrapolate any clear developmental potential of remittances.

Sources

The following resources provide a perspective on the scope and complex impacts of remittances, and the attempts to harness their developmental potential.

  1. Map displaying global remittances as a percentage of the GDP of migrant countries of origin.
    Migration Policy Institute. World Remittances as a Percentage of GDP.
    Global Picture of Remittances: Formal Remittances Representing the Share of Gross Domestic Product (GDP) by Migrants' Countries of Origin
     
  2. Brief video providing general information on remittances and their potential developmental impacts.
    IFAD. Sending Money Home. (download link)
     
  3. Section of a report describing three ways to enhance the developmental potential of remittances.
    PDF iconSending Money Home (IFAD)
    IFAD. Worldwide remittance flows to developing countries in 2006, page 3.
     
  4. Summary of a report providing a more critical perspective on the developmental consequences of remittances in Mexico and El Salvador.
    PDF iconImmigrant Remitting Behavior and Its Developmental Consequences.
    Institute for Social and Economic Research and Policy. Summer 2005.
     
  5. Map portraying remittance flows from an article in the Atlantic Monthly.
    Quirk, Matthew. 2007. The Mexican Connection (map). The Atlantic Monthly.
    Accompanying article.
    Mexican populations by county and total remittances to Mexico by state

Discussion Questions

  1. Compare the two maps (source one and source five) and critically assess the information that the maps convey (both maps are mostly based on remittance flows through formal channels). How does source five complicate how the information is presented in source one? And what does this reveal about remittance flows to sending countries and efforts to harness the developmental potential of remittances?
  2. What are the obstacles to improving the developmental impacts of remittances, as identified by the International Fund for Agricultural Development (source three)? How does this contrast with the findings from the study conducted by the Institute for Social and Economic Research and Policy? How is 'development' defined in the different sources?
  3. The household is identified as the primary recipient of remittance flows. Do any of the sources explicitly discuss the complexities of intra-household dynamics, such as gender relations? What are the possible ways in which gender dynamics could influence how remittance income is spent?

Suggested Readings

Binford, Leigh. 2003. Migrant Remittances and (Under)Development in Mexico. Critique of Anthropology 23, no. 3:305-336.

De Haas, Hein. 2005. International migration, remittances and development: myths and facts. Third World Quarterly 26, no. 8:1269-1284.

Sana, Mariano, and Douglas S. Massey. 2005. Household Composition, Family Migration, and Community Context: Migrant Remittances in Four Countries. Social Science Quarterly 86, no. 2:509-528.