Global remittances to low- and middle-income economies fell 1.6% in 2020, defying expectations of a sharper drop
By Eun-Young Jeong of The WSJ. Excerpts:
"Foreign-born workers sent more than $500 billion back to their home countries in the developing world last year, as the economic recovery and generous government programs in areas such as the U.S. helped sustain a critical lifeline for poor nations still battling the Covid-19 pandemic.
According to fresh data from the World Bank, global remittances to low- and middle-income economies fell just 1.6% last year to $540 billion, defying expectations that the pandemic would squeeze overseas workers’ ability to earn and send money to relatives in their home countries."
"Foreign direct investment in medium- or low-income countries fell 30% last year, excluding China, the world’s top destination for FDI.
During the pandemic, stimulus payments and enhanced unemployment and furlough programs in the U.S. and Europe allowed foreign-born workers there to continue to work and cushioned the fall in their incomes. Moreover, many migrants work in key industries such as delivery services and healthcare that continued to operate last year."
"Remittances make up over a fifth of the gross domestic product in countries such as Lebanon, Nepal and Jamaica."
"In the Philippines, where remittances make up over 7% of its GDP, payments from abroad are forecast to have reached $2.5 billion just for the month of March, a 4.8% rise from the previous year"
"In Mexico, remittances reached $4.15 billion in March, the highest amount ever sent from the U.S. to Mexico by migrant workers in a given month and up 2.6% from the same period last year"
10 comments:
I am not sure how to feel about Remittances. To me this seems like it would hurt our economy more than it would be helping it. Do you have any extended knowledge on this matter and perhaps I am thinking of this the wrong way?
Thanks for reading and commenting.
I don't think that remittances are necessarily bad. The immigrants who made money did so by producing goods and services here in the USA that we all benefit from. When they send the money home their relatives may purchase US goods.
This seems like normal trade. A foreigner can make product here or in their own country. We pay them here and they send the money home or they make it in their own country and we send the money to them. Either way, it seems like the same process.
The difference is that the foreign worker will be more productive in the USA. It benefits everyone to have workers in the location where they can produce the most
this is a wonderful explanation. the theory that people abroad could use the money to buy more good from here. also, the worker being more productive on this land as well makes a lot of sense...but they could spend the money with other countries just as well. you did kind of allude to that part though. What about the migrant workers that don't pay a payroll tax?
Remittances are indeed a boon for the developing economies. Many cities have grown and developed just on account of remittances from abroad. No doubt, remittances have led to inequalities here in India. But, the overall impact is favourable. Remittances serves the purpose of 'comparative advantage' and is an important aspect of an economy. Though, high remittances from countries like USA, seems not to be a so healthy development.
"the migrant workers that don't pay a payroll tax?"
I think I have read that people in that case generally get less in social services than they pay in taxes. But I don't have any links on this.
And I think there are illegal immigrants that do pay into social security who won't ever get anything from it
Why are high remittances from countries like USA not a so healthy development?
i figured that money flowing out of the USA is not necessarily a good thing when we have the opportunity to train and employ our citizens. I think we have some of the best infrastructure in the world and the money flowing out may be marginal.
Also, as it pertains to unemployment, it seems like the jobs that are filled by day laborers would put citizens in a predicament of Unemployment if that is the main skill set. We know that citizens paying taxes goes to the system to support infrastructure, education and things of that sort. I do think the money could be better spent and we could support new mothers for a couple of years that as they are back filling the future.
These are just a few ways that natural born citizens can help the economy. Healthy development in my mind would be building the best citizens possible and sustaining that for the future. The handouts(as many people call it) don't seem to help incentivize many to realize the American Dream, but I do believe that Transfer Payments are very important.
Generally immigrants benefit the economy in the same way trade does. If you are good at picking apples and I am good at picking bananas, we specialize then trade and benefit.
So when people immigrate they do jobs that allows Americans to do other jobs that they are good at and the immigrants do jobs that they are good at
Before the pandemic we had very low unemployment despite all the immigration. Immigrants are more likely to start new businesses and invent new products.
If a chef immigrates to the U.S., he creates jobs when he opens a restaurant
High remittances from countries like USA will create a culture of dependency in the destination nation. Such dependency will prove to be very deleterious, in the event of sudden migration of workers from the destination nation to their respective nations, on account of any political instability. Moreover, though it improves the production level in the destination nation, it also adds to the competitiveness for skilled jobs in the destination nation.
Great article about Strong U.S. Economy very informative thanks for sharing
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