Rethinking Remittances Steven Vertovec University of Oxford & ESRC Research Programme on Transnational Communities

Rethinking Remittances 1. Some facts and trends 2. Patterns of remittance 3. Impacts: economic 4. Impacts: social & cultural 5. Conclusion

World Totals - Workers’ Remittances (million $ US) source: International Monetary Fund

Workers’ Remittances - selected Countries (million $ US) source: World Bank, International Monetary Fund

For Example...  El Salvador: greatest relative economic impact in Latin American and Caribbean – remittances estimated at $1.3 billion, but – economy is only $9.5 billion – remittances account for approximately 13 per cent of the economy – exceed the major exports and foreign assistance – up to one-third of families receive remittances

Who sends remittances?  Sent by entire spectrum of migrants: – legal/illegal – permanent/temporary – upper-class/working class – middle-aged/young – married/single – male/female  Changes per length of stay, stage of life

Sent to Whom?  Overwhelmingly, Family…  But divergent patterns of reception: e.g., Bridget Anderson’s research on female migrant domestic workers: – Among 83 women from four nationalities – Only 2 sent money back to husbands (most sent to mothers, sisters, daughters) – “The response was absolutely clear and ‘transnational’: men are not to be trusted.”

Sending Remittances  Firms used by migrants in the USA to transfer money – 43,000 outlets; 36 million transfers in 1996 – ($29.6 billion remitted out of USA in 1996) – average amount remitted: $320 – use variable exchange rates; pay transfers in currencies of country of destination – may skim off around 20 per cent, rather than the often advertised commissions of less than 7 per cent

Sending Remittances (cont’d)  Remittance Means: – Formal government schemes (e.g. bonds) – Checks, money orders, electronic transfers – Couriers, post, carry by self, friends, family – In-kind (clothes, consumer goods)  Means tends to vary by national group – e.g., Salvadoreans: small couriers Dominicans: remesadores Mexicans: money orders & wire

Presumed Negative Effects  Displaces local jobs, income  Induces consumption spending  High import content of consumption  Inflates local prices of land, housing, food  Creates disparity, envy between recipients and non-recipients  Creates dependency

Estimated ‘multiplier’ effects of migradollars on production in Mexico (source: Durand, Parrado and Massey 1996) Landless Rural Worker Small Farmer Unskilled Urban Worker Skilled Urban Worker Total Millions of US$ remitted ,000 Effect on Production in Agriculture ,739 Petroleum Manufacturing ,511 Services ,898 Commerce ,278 Total$2,059$222$2,190$2,050$6,521

Wider Impacts  Community level: – normative transmigration – Building new districts – Local markets more frequent – Hospitals, mosques, schools, orphanages, health clinics, sports facilities – Development: e.g potable water projects – Sustain war effort / perpetuate conflict – More beer! Festivals and celebrations

Wider Impacts (cont’d)  Restructuring local status hierarchies – class, reputation: family and group  Stimulating religious fervour / ritual activity  Altering consumer tastes, styles, expectations  Transforming gender relations  Costlier weddings, inflated dowries  ‘transmigrants get the nicest girls’ [& boys!] (Riccio 1999) – reshaping marriage patterns

Conclusion  Must understand ‘transnationalizing’ of social, cultural, economic and political life – remittance represents not just finance, but the global ‘stretching’ of: household decision-making family life course and strategies collective resources social structure / cultural institutions community activities and development – each case highly conditioned by context(s)