GLOBAL TRENDS OF ECONOMIC EFFECTS OF MIGRATION-Impacts on Small and Medium Enterprises (SMEs)
The United Nations estimates that there are 214 million migrants across the globe, an increase of about 37% in two decades. One theory of immigration distinguishes between Push and Pull. Push factors refer primarily to the motive for emigration from the country of origin. In the case of economic migration (usually labour migration), differentials in wage rates are prominent. If the value of wages in the new country surpasses the value of wages in one’s native country, he or she may choose to migrate as long as the costs are not too high. Escape from poverty (personal or for relatives staying behind) is a traditional push factor, the availability of jobs is the related pull factor. Natural disasters can amplify poverty-driven migration flows. This kind of migration may be illegal immigration in the destination country (emigration is also illegal in some countries, such as North Korea, Myanmar, and Somalia). Economic net effects of migration Persons who have emigrated from one region to another region for purposes of seeking employment or improved financial conditions are economic migrants and are distinct from someone who is a refugee fleeing persecution. Sending Countries may expect gains or losses. For receiving countries temporary programs help to address skills shortages but may decrease domestic wages and add to public welfare burden. Net effects of migration are generally been considered to be positive. The Economist magazine, for example, claimed that loosening restrictions on labor migration "would be one of the fastest ways to boost global economic growth." The positive effects, they say, would be significantly greater than removal of any trade barriers. For sending countries, the short-term economic benefit of emigration is found in remittances. According to the World Bank, remittances world wide were estimated at $414 billion in 2009, whereof $317 billion went to developing countries. This figure though only takes into account funds sent by formal channels, so the number is much larger. Less privileged economies can suffer from "brain drain"-the loss of trained and educated individuals to emigration, an example of the possible negative effects of emigration for these Countries. E.g. are currently more African scientists and engineers working in the United States than there are in Africa. In India, 100,000 skilled technology workers are expected to leave in the next three years. Since it costs India about $20,000 per student to educate these individuals, India essentially will subsidize the rest of the world for $2 billion worth of technology education. MIGRATION AND TRANS-NATIONALISM Several case studies have examined how small and medium entrepreneurs (SMEs) in Africa, Asia and Latin America continuously affiliate with partners or clients in Europe, Saudi Arabia and the United States, creating social networks that benefit migrants, as well as the communities they left behind and the ones they belong to in receiving countries. ‘Transnationalism’ is a concept that is increasingly used to capture the nature of today’s cross-border movements and their outcomes. A growing trend in transnational social movements is the joint efforts of migrants to maintain and foster links with their places of origin through the creation and organization of ‘hometown associations’ (HTAs). HTAs are established not only in response to the social and cultural challenges faced by new immigrants in adjusting to life in a foreign country, but also to fund small-scale development projects in home communities through collective remittances. Immigrant entrepreneurs (most of them Micro-enterprises and SMEs are also ‘social actors’, who participate actively intransnational activities. For example, in the Dominican Republic, there are hundreds of small- to mediumsized transnational enterprises (SMEs),including small factories, commercial/retail establishments and financial agencies. Such ventures are created and run by former migrants, who have returned to the Dominican Republic after acquiring capital and establishing ties with migrant communities in the United States, thus acquiring clients and investors abroad. The author observed in the Republic of Hungary a similar trend after the change of the political systems in Eastern Europe. In Tajikistan, remittances from its cheap unskilled labour force abroad in countries like Russia, Kazakhstan, and Uzbekistan has helped the country rebound from the failures of a planned economy and government instability, contributing around 50 percent of Tajikistan’s GDP in recent years. For example, Somaliland, a breakaway region of conflict-devastated Somalia, receives an estimated $500 million a year in money sent home from abroad, four times more than the income from the main export, livestock, according to a study by the researcher Ismail Ahmed reported in the Financial Times. In the case of Mexico, remittances have become the country's second most important source of foreign exchange, after oil. The income is so large that Mexicans working outside of the country were able to gain the right to vote after threatening to withhold remittances. MIGRATION AND REMITTANCES Migrants make significant sacrifices to send an average of US$200 eight or more times per year to their home country. Several studies indicate that permanent migrants send about 15 per cent of their salary home, whereas temporary migrants may remit up to 50 per cent of their income. Cost of remittance transfers: Globally, the average cost of sending remittances was about 12 per cent of their value in 2004 (World Bank 2006, 137). However, costs may range from a low of 0.2 per cent to about 20 per cent, depending on the remitted amount, type of service used, destination and transfer location. Costs tend to be highest for small transactions, since most transfer services charge a minimum fee. A comparative study of the transfer costs to 11 low-income countries in Africa, Asia and Europe demonstrated that banks have become considerably cheaper than international money transfer companies over the last several years. The value of remitting through banks was 7 per cent, compared with 12 per cent for companies such as Western Union (Orozco 2003c, 9). A recent study of the corridors between France and the Comoros, Mali, Morocco and Senegal shows that money transfer costs are still quite high. The cost of transferring € 300 varied from €10 to € 29. Bank transfer was the cheapest, while transfer through Western Union was the most costly (BAfD 2007, 27). RECOMMENDATIONS FOR ACTIONS A resolution on international migration and development was adopted by the United Nations General Assembly in 2004. It calls upon all relevant entities of the United Nations system – and other relevant intergovernmental, regional and subregional organizations – to adopt policies and undertake measures to reduce the transfer costs of migrant remittances to less priviledged Countries. Further, one item of the action plan to achieve the MDGs (Millennium Development Goals), agreed upon at the 2004 Group of Eight (G8) Summit, is to facilitate remittance support to families and SMEs. In 2007, the First Global Forum on International Migration was organized, with the participation of 155 countries.The forum is a global process designed to enhance the positive impact of migration on development (and vice versa) by adopting a more consistent policy approach, identifying new instruments and best practices, exchanging know-how and experience and establishing cooperative links among the various actors involved. Participating governments agreed that migration should not become an alternative to national development strategies in developing countries. It is important that migrants and recipient communities gain a better understanding of the various options for remitting and receiving. In particular, migrants and recipient communities need access to local financial institutions, not only because of the lower remittance costs, but also because of the greater opportunities to initiate or increase their savings and their access to other financial services such as housing loans. New technologies may also help lower the cost of remittance transfers and allow migrants and their families at home to send and receive remittances with greater ease. One of the popular techniques in the Americas is the use of automatic teller machine (ATM)/debit card transfer services, which are being offered by a growing number of private banks. When migrant workers enrol in such programmes, they are issued a debit card to be used by a designated person in the home country. The cost of this type of transfer can be less than half the cost of a traditional transfer REFERENCES WORLD MIGRATION REPORT 2010 (IOM) – The Future of Migration Building Capacity for Change WORLD BANK, Sept. 2010 – Migration and Remittances INTERNATIONAL ORGANIZATION FOR MIGRATION (IOM) – Remittances and the Movement of Workers ILO –GTFA Conference, Geneva, 21 June 2010 IFAD – FAO - International migration, remittances and rural development, 2008 by the International Fund for Agricultural Development (IFAD) THE FINBANCIAL EXPRESS, 14 Jul 2010
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