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Expatriates and the Economy

Time Magazine has an article on the the 39th largest GDP in the world. That credit does not go to a nation, but to the expatriate community which sends money back home. The amount is set to cross $232B and in many countries the money from the expatriates have exceeded that from exports and foreign aid.

The article talks about immigrants from Africa, Indonesia and Mexico who work in Europe, Singapore and United States and send money back through both legal and illegal means of fund transfer. These migrants sometimes live in miserable conditions so that their family can have a decent life.

The life of squirreling away money is grueling: it involves years-long separation from families, miserable living conditions, and the threat of deportation for the many who are working illegally. All the same, remittances play a vital role in recycling money from the rich world to the poor one. “Migration is going up,” says Ratha. “We had better not wish it away, because it’s very much there to stay.” [Follow The Money]

India too has a large expatriate community which sends money back home and a vast majority of them come from my home state of Kerala. According to the Prime Minister of India, 2.5 million NRIs from Kerala alone contributed 50% of India’s $102 Billion of foreign exchange reserves in 2003. In 2004, India topped the list of countries which obtained remittances from abroad.

Some of these expatriates, especially the ones in Arab countries, live in miserable living conditions without access to fair trial and the right to practice their religion. The state of Kerala depends a lot on this NRI money obtained due to the globalization of labor and in turn they protest globalization of capital.

The article concludes witht the following observations

Vital though the flow of remittances may be, it cannot, on its own, lift entire nations out of poverty. Those who study the impact of remittances argue that the money allows poor countries to put off basic decisions of economic management, like reforming their tax-collection systems and building decent schools.

Remittances to poor countries can also mask the fact that they don’t produce much at home. [Follow The Money]

When it comes to Kerala, the second observation is right, but the first one is not. This NRI has money (along with other social reforms) has lifted the state of Kerala from poverty and if you walk around you will not find a single beggar there. But then once the umbilical cord from the Gulf countries is cutoff, the state may slip back into poverty.

Another disagreement with the article is regarding the image it portrays of immigrants in various countries are people being opressed. There are educated Indian immigrants in various countries who live in excellent conditions (sometimes even better than natives) with their families, without facing any threats of deportation.

One Response to Expatriates and the Economy

  1. varnam January 1, 2006 at 7:18 am #

    2005 In Review

    At the end of 2005 here is a look at the topics that were covered in varnam and some of the important posts, in blogmela style. India: We discussed the story of how Natwar Singh was found with his hands…

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