Thank you for participating in the discussion. To download the full report in English, and the executive summary in Spanish and Portuguese, visit http://www.worldbank.org/lac.
The full transcript of this discussion will be available soon in Spanish and English.
La transcripcion completa de esta discusion estara pronto disponible integramente en espanol e ingles.
¿Cómo puede lograrse que las remesas contribuyan más con la inversión en capital físico (casas de habitación, edificios para microempresas, compra de terrenos), es decir, con crear más "propietarios" en los países receptores, y así fomentar actividades privadas con mayor rentabilidad?
De una parte es importante tener un buen clima de inversión que incite a los receptores de remesas a invertir. Esto debiera incluir aspectos relacionados a la estabilidad macroeconómica, al respeto a los derechos de propiedad, y de una manera más mecánica a la facilidad y credibilidad de los derechos de propiedad.
Hola soy hondureña y estoy viviendo este "clima temporal de desarrollo" que ofrecen las remesas, considero que muchos gobiernos latinos estan cubriendo la verdadera situacion economica de nuestros paises al apostarle todo a las remesas pidiendo al gobierno estadunidense que amplie convenios migratorios para alargar la permanencia latina en ese pais, en lugar de buscar apoyo tecnico y de conocimiento en areas claves del desarrollo para asi poder generar empleo en nuestros paises y que no exista la necesidad de que muchos compatriotas arriesguen sus vidas, necesitamos politicas DE DESARROLLO SOSTENIBLE para que asi las economias de America Latina no se encuentren en la cuerda floja, ya que...que pasaría si deportan a todos los indocumentados?, obvio, dejariamos de recibir remesas que son los "caramelos con que estan encubriendo, muchos gobiernos, la verdadera situacion economico-social de A.L.
Ahora mi pregunta es: Existe algun tipo de estrategia, para cuando el mercado estadunidense se encuentre sobrepoblado de latinos y la mano de obra de estos se cotize tan barato que sus ingresos solo les ayudaran para subsistir y por lo tanto dejarian de enviar remesas a nuestros paises.....existe alguna accion proactiva ante esta posible situacion????...hasta que grado la inmigracion es positiva??,muchas gracias.
Empiezo respondiendo por el final. En principio la emigración y las remesas asociadas a tal emigración tienen un impacto positivo en el desarrollo de la región latinoamericana. Sin embargo, este impacto positivo no es muy grande y además es muy desigual entre los diferentes países. ¿Qué quiere decir esto? Quiere decir que como tu bien mencionas, para elevar los niveles de vida de los diferentes países se necesitan políticas de desarrollo sostenible sanas y saludables.
Heber M. Delgado-Medrano:
What are the main factors that explain why some people might use remittances primarily towards consumption? Is this the result of economic values/personal choices, lack of entrepreneurship, or is it a function of poor investment climates, lack of investment opportunities, high opportunity costs of saving/investing? Both? Is there any empirical evidence?
This is a very good and important question. The answer is that both types of explanations apply in this case; that is, the percentage of remittances' income that goes to consumption as opposed to savings and investment is both a function of the particular preferences of the families that are involved as any other sources of income that are private. Households have, you know, the freedom to spend that income in any way that is best for them, and so it's not any different from labor income, and a small percentage of income, only a small percentage, is saved.
However, the percentage that is saved depends not only on those personal preferences for economists who like to say "utility functions." It also depends on the business environment. So, areas where there are more investment opportunities and where the risks associated with investment is lower, it there will be higher fraction of income that will be invested, and that applies not only to labor income, but also to the income from remittances.
And the question regarding the empirical evidence, whether there is empirical evidence on this, the answer is yes. Our report provides empirical evidence, both looking at households and looking at the aggregate economy; that is, both micro and macro evidence.
In the first case, we look at saving rates of households in different parts of the income distribution. We compare poor households that receive remittances with other poor households with similar levels of income, similar family composition, so similar economic and social conditions, and we find that poor households tend to save more when they receive remittances, but when you compare richer households that receive remittances with others, we find the opposite. So, among the richer households, the saving rates are lower than those that receive remittances.
At the aggregate level, we find countries that receive remittances invest more the rates of aggregate investment are higher, and that explains the fact that the growth rates of the economies that have higher remittances tend to be slightly higher. This effect, however, is not large in magnitude, so in the last 15 years, an average of the increase in remittances in Latin America was responsible for 0.3 percent additional growth in GDP per capita and half of that effect was explained by higher investment rates.
We find, however, that in countries where the macroeconomic policies are better, where the business environment is better, and where levels of education are better, the effect on investment and growth is higher, which confirms the hypothesis where the investment climate is better, higher fraction of remittances are saved and invested.
What is your opinion about remittances as a Dutch Decease phenomena?
Remittances are associated with more valued local currencies, that is, with an appreciation of the exchange rate; that is, the fact that the statistics show that there is this positive correlation between the real exchange rate and remittances. However, whether that is evidence of a Dutch disease phenomenom depends on whether the reason the real exchange rate is temporary or permanent and the case where it is only temporary, then we will potentially have a Dutch disease problem.
In these reports we provide evidence that some of the increase in the real exchange rate, the real appreciation, is temporary, and some is permanent, so we find evidence that in most countries, though not in all, high remittances flows do lead, to some extent, to a Dutch disease effect.
Por observación apreciamos que la migración hondureña internacional, sobre todo hacia los Estados Unidos, en estos momentos esta atraída por la autogeneracion/ reproducción de la misma diaspora hoondureña migración que ya existe en Estados Unidos, por "el que ya se fue" que se "lleva sl exterior" al proximo miembro de ese mismo nucleo de la familia extensa.
Si ello fuera así, los "convencionales" factores de expulsión y atracción necesitarían ser cuestionados o revisados.
Pregunto....¿tienen ustedes datos de los hogares que reciben remesas en Honduras estratificados desglosados por el numero de remitentes o de emigrados que hay por hogar?.
Sería interesante correlacionar ese dato por con el total de remesas recibe cada hogar anualmente.
La actual migración es más una reproduccion de la diaspora.
El factor de atracción es el migrante --vecino o familiar-- que ya esta en el sitio de destino.
Nota: Por compromisos de trabajo, perdone que no pueda estar en el chatting pero me ayudarían mucho esos datos para una investigación que al presente estoy haciendo.
Desafortunadamente, no tenemos datos sobre los hogares que reciben remesas estratificados por el número de emigrantes que hay por hogar en Honduras (lo cual tengo que admitir nos ha creado un número de problemas metodológicos en el análisis). Sin embargo, puedo decir que sí que existe evidencia que indica que la emigración está relacionada a la existencia de una diáspora. Es lo que llaman en inglés "network effects". En este sentido, la diáspora no solo hace llegar información sobre posibilidades de puestos de trabajo, o como asimilarse al lugar de destino, sino que también ayuda con los costos iniciales de asentamiento y vivienda.
As I also speak about in my “Voice and Noise” so much is written about the issue of “brain drain” though from the perspective of a nation this is clearly a minor problem when compared to the “heart drain” that leads to a national to separate himself completely from the country and on a practical note, stop the remittances. Why is there no reference to this?
Well, the issue that Mr. Kurowski brings is the issue of the separation of the migrant from his home country and the social consequences that has beyond the economic consequences. In the report we do not get into these types of social issues, rather, and concentrate on the economic aspects of remittances.
We do mention, though, that there are a number of costs associated with migration that are not economic in nature, but social, such as the separation between parents and their children, and the consequences of losing an important part of the speculation to migration. We do not get into this because we concentrate on economic issues, but we do mention that these social consequences of migration should be taken into account in a broader approach.
Some studies, e.g. Pozo and Durantes 2004, suggest that remittances produce a significant real exchange appreciation in LAC. Do you think that remittances could thus have an uneven sectoral impact, stimulating non-traded services but depressing agriculture? Do you think that such a line of research may be a worthwhile endeavour?
To the extent that remittances make the real exchange rate higher, it is more difficult to export, and it is easier to import, so clearly there is a different effect on the various sectors of the economy. And as Simone Bertoli mentions, this should stimulate non-traded services and create challenges for the tradable sector, so what this implies is that governments need to increase their efforts to facilitate the movement of resources across the different sectors of the economy because, if there is more fluid mobility of resources between sectors, the impact that was just described will be smaller.
In addition, efforts to increase the competitiveness of the export sectors by improving the business environment becomes even more important when there are higher remittances. This is, in fact, an important line of research as mentioned by Simone Bertoli.
manuel a cardenas:
Si bien el envio de recursos de connacionales a América Latina no reemplaza políticas de desarrollo bien estructuradas sin embargo ayuda en forma oportuna a las clases mas necesitadas en este periodo de desarrollo de sus respectivo países. Creo que en esta como en otras materias podemos aplicar el dicho "lo mejor es enemigo de la bueno" y creo que este es un caso. Por el momento creo que se debe incluso facilitar este tipo de envio, asegurar formas de inversión alternativas con estos dineros para así darle a estos recursos un aprovechamiento mas eficiente y esperar que las políticas de los respectivs países incrementen la ocupación productiva y no la disfrazada.
Totalmente de acuerdo en que hay que facilitar el envío de remesas a la región (tengo que enfatizar que las remesas tienen un impacto positivo en el desarrollo de la región). En este sentido el informe repasa con bastante detalle cómo bajar los costos de las transferencias y cómo mejorar la infraestructura para facilitar los flujos de remesas. Pero al mismo tiempo tenemos que plantearnos cómo aumentar el impacto potencial de las remesas y es aquí donde entran las políticas de los diferentes países.
Since the remittances of the migrants represent the sale value of skills or talents that could have been utilised at home, the real value of such remittances is only the difference between prevailing wages at home for the same skill or talent and what is earned abroad. Also such sale of skills often result in lower wages than what is earned by local persons in the same trade or skill. In such case, there is real drain of potential wealth from the country of origin to the host country. Do we have a fair system to measure this loss.
Secondly , the remittances go into the individual Banking Accounts of those who earn or their rlatives and the parent Government hardly has a leverage in orchestrating policy initiatives to meet the Economy's needs. Why are we judging them as inefficient on this account?
These are very good questions, and from the first comments that the real value of remittances is the difference between prevailing wages at home for skills that those people have abroad, that is, indeed one possible way of measuring the impact of remittances. It's not the traditional approach or the approach that we take. In our case, we are focusing on what is the impact for the country and excluding there only the population that stayed back home.
So, the approach that this question suggests is that one should look at the whole population of the country thereby including not only those that stayed at home, but those that migrated. That is a possible approach; it's not the traditional one.
And with respect to the second question, how can we measure the loss from people that migrate being employed in occupations in which they do not earn the same as the locals, this is something that is in the reports we called "brain waste" as opposed to or complementing brain drain, and the way in which we measure this is by looking at data from the U.S. census and the occupations in which the migrants are employed, and we find that for some migrants--many migrants, actually, that have university degrees earned in their home countries. The occupations in which they work in the U.S. do not require high levels of skills, so you have university graduates basically doing manual jobs in which they are not taking advantage of their skills.
However, if they still do migrate, it must be because, from a private perspective, from an individual perspective, the prospects of migrating are larger than the expected costs. So, we expect those flows to continue.
And as for the third question regarding whether remittances' income are private or whether the governments could have some leverage in orchestrating initiatives to direct remittances to some uses as opposed to others, we agree the way in which the question is drafted in the sense that governments cannot really--and shouldn't really--tell families or households what to do with their income. There have been in the past some initiatives, for instance, regarding taxes on remittances to create incentives for using them in some ways as opposed to others. We think those have been failures, that really governments shouldn't be telling people what to do with their money. What governments can do is to improve the investment opportunities in the country, and then people will have an incentive to invest more, but ultimately it's up to the families or the relatives or the friends of the migrants to decide what to do with the remittances income.
What do we know about the differences between remittances travelling through formal versus informal channels? Are those that are sent through the latter more or less likely to go to the poorest households? If, as seems probable, remittances through informal channels more frequently go to the poorest than do those through formal channels, could we, from a policy perspective, be dangerously underestimating remittances' impact on poverty by primarily studying those through formal channels?
We really do not know exactly how large are the remittances' flows that go through informal channels. However, there is evidence that in Latin America and the Caribbean, informal channels play a smaller role than in other regions of the world.
So, there is evidence that most remittances in Latin America go through money transfer operators, and we also know that not more than 10 percent go through banks or other financial institutions.
And we do have evidence as well that, as said by Emily Warren, the poorest migrants are less likely, let's say, to use banks or financial institutions, than to use money transfer operators. That is because richer individuals are more likely to have bank accounts and other families are likely to have bank accounts. So, it is also likely for the same reason that richer individuals will be less likely to use informal channels.
What is important to say here is that initiatives aimed at taxing remittances could actually increase the amount of remittances that go through informal channels. So, we believe that in order to increase the share of remittances that goes through formal channels and the governments should focus not on taxing remittances, but rather on facilitating the access to bank accounts by migrants and their families.
Large number of workers from developing countires such as Nepal are employed in low paid jobs in Gulf and other western asian regions. Though the remittance figure in aggragate looks impressive, and might help to improve the consumpution pattern it is hard to beleive that it will contribute to poverty reduction in the long-term. Futhermore, people who go abroad for work might not be the ones who are rich and affluent, but who could have land to mortage to finiance their travel and comssion to recruitment agencies. My question is how the poor could get the benefits from remittance?
In this study, which is focused on Latin America, we have looked at the profile of the households that receive remittances, and we find that the profile is very different across different regions and sub-regions. So, in the case of Mexico and Central America, poor households are more likely to send migrants and receive remittances probably because the cost of migrating from Mexico and Central America to the U.S. is much smaller than the cost of migrating from South America, for instance, to Europe or the U.S. So, in South American countries, we do find that a large fraction of the families that receive remittances are from the middle class, which is consistent with the description made by Navin.
The poor cannot afford that cost. How can they benefit from remittances? They could benefit from remittances indirectly if remittances raise economic growth. That is, as we know, poverty can be reduced either by increasing the size of the pie, that is, increasing the rate of economic growth, or by reducing inequality. So, if remittances contribute to economic growth, they could indirectly benefit the poor even in countries where the poor do not receive a lot of remittances because they cannot afford to migrate.
remmitance receivers spend these resources on HH education and health. I think Safety Nets to improve these and other basic services would free up these resources to be invested in income generation activities. Does the Bank support (or supports) such schemes? Can countries receive loans for safety nets if governments commit their own resources to invest in basic sevices in remmitance communities?
Indeed, the Bank lends not only to safety nets but more generally to the social sectors: education, health, and other social services represent about one third of the Bank's lending to the Latin American region.
(1) Is there a way for financial institutions that offer remittance services on the sending side to play a role in enhancing the development impact of remittances?
(2) Does linking financial products to remittances (through regulated financial institutions) contribute to higher investment and faster growth by providing receivers with additional non-consumption alternatives?
The answer to both questions is yes. Let me start with the second question. If the families that receive remittances do so through banks, they are more likely to open bank accounts and to use other financial products like mortgages or other types of loans. By doing that, they can have benefits from remittances' income not only in the short term, but also in the medium and in the long term by investing some of the remittances or by getting loans that allow them to invest.
So, linking financial products to remittances is a very important avenue for increasing development impact of remittances.
Going back to question number one, in order for to linkage between financial products and remittances, both the senders of remittances and the recipients must have access ideally to bank accounts. So, in the specific case of the senders of remittances, that is, the migrants in the U.S. or in Europe, for instance, financial institutions can play a role by developing strategies to reach that market segment made up of migrants. A large number migrants may be undocumented, do not have legal identification, legal IDs, let's say, in the countries where they live, and this may create problems for some banks.
There is a debate as to whether migrants can use IDs issued by their home countries or by the consulates of those countries for opening of bank accounts, and some financial institutions are, indeed, accepting those forms of ID.
Alice Hurtado de Mendoza:
What about governments playing an active role in creating occupational training opportunities that would help redirect remittances to human development?
Remittances are used by poor households to pay for food, non-durables, housing, and also for human development, that is, for paying for schools and for health services. In fact, we find that poor families in most of the Latin American countries for which we have data, when they receive remittances, they spend a higher percentage of their income in human development, that is, in education and health--than families with similar levels of income and demographic characteristics that don't receive remittances.
So, in practice, remittances are used for human development, and we find kids from families that receive remittances stay a longer number of years in school, and their families also have access to better quality health services, so there is, in practice, naturally a positive effect on human development. Whether governments can do something to increase that impact, the answer is yes, however, it is not clear whether government policies should be directed only to those who receive remittances or should be directed to the population that is in need of those services at large.