Migration and the remittance euphoria: development or dependency?

Migration and the remittance euphoria: development or dependency?

Migrant remittances are not a panacea for economic growth

This report is critical of the attention paid to the role of migrant remittances in promoting economic growth. It argues that little attention is being paid to the effects on sustainable development, equity and long-term poverty reduction, and that, while remittances can relieve poverty selectively in the short-term, there is no evidence that they provide a solid foundation for sustainable development in the long-term. The report takes a critical look at the migration and remittance euphoria and sets out a programme for reform that would begin to address the systemic global inequality that drives migratory flows.

Some of the central arguments are:

  • migration has not been shown to lead to sustainable development in poor sending countries, but has simply increased their dependency on the rich industrialised economies of the developed world
  • remittances are very unevenly spread between developing countries, and tend not to flow to the poorest
  • the social and psychological costs of migration on sending families and communities must also be offset against remittance benefits
  • although remittances can selectively relieve the poverty of recipients and enable household (and sometimes wider community) consumption and saving, they do not automatically generate development, and should not be regarded as a substitute for policies that do so

The report's conclusions and policy recommendations are:

  • transaction costs associated with remittances should be reduced
  • a government-to-government repayment of tax already paid on remittances in the migrant-receiving country should be introduced
  • there should be an attempt to reduce brain drain by encouraging the return of skills through the promotion of ‘circular migration’
  • immigration regulations for unskilled labour should be reduced where possible, in order to encourage a more mobile labour market
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