Posted on August 21, 2007

Migrant Cash Is World Economic Giant

AP, August 19, 2007


Around the world, millions of immigrants are sending billions of dollars back home.

One sweaty wad of bills or $200 Western Union moneygram at a time, they form what could be called Immigration, Inc.—one of the biggest businesses on the planet.

Experts tracking the phenomenon told The Associated Press they have gotten a much clearer picture since the 9/11 attacks, when authorities trying to cut the flow of cash to jihadists began taking a harder look at how immigrants move their money around.

Mass migration, they say, has spawned an underground economy of staggering proportions.

Globally, remittances—the cash that immigrants send home—totaled nearly $276 billion in 2006, the World Bank says. Remittances have more than doubled since 2000, and with globalization increasing the numbers of people on the move, there’s no end in sight.

If these guest workers incorporated as a company, their migrant multinational would rank No. 3 on the Fortune 500 list, trailing only Wal-Mart and Exxon Mobil in annual revenue.


And unlike the conventional economy, more cash tends to change hands in an economic downturn, political crisis, natural disaster, famine or war.


There are other downsides: fears of brain drains and a vast permanent army of economic exiles, and the untaxed earnings flowing out of host nations.

The U.S. lost $41.1 billion in 2005, according to the World Bank, while Switzerland watched $13.2 billion trickle out of the country that year.

But Giuseppina Iampietro, a Swiss Economics Ministry spokeswoman, says little can be done: “Immigrants have no obligation to invest their money in Switzerland.”

Meanwhile, from Poland to the Philippines, remittances are throwing lifelines to families combating poverty and helping to keep some national economies afloat:

* Across Latin America, remittances hit $62 billion last year and are projected to top $100 billion by 2010, the Inter-American Development Bank says. Mexicans wire home the most cash—nearly $22 billion—most of it earned in the U.S.

* India is the world leader in remittances, taking in $23.7 billion in 2005 and an estimated $26.9 billion last year, the World Bank says. Western Union, traditionally one of the most frequently tapped money transfer companies, says its share of Indian transactions has grown at least 90 percent over each of the past six quarters.

* Immigrants from Albania, one of Europe’s poorest countries, will send more than $1.3 billion back to their homeland this year. That’s 13 percent of Albania’s GDP and enough to finance half the trade deficit.


In impoverished Tajikistan, the National Bank says migrant laborers sent home $1.1 billion last year—more than the country’s GDP. Filipinos working overseas sent home a record $13.6 billion in 2005. So much cash is flowing that mobile phone operators make it possible to transfer money over a cell phone.


In Albania, where the average monthly wage is only $250, a third of the population of 3.2 million have left for better jobs in the U.S., Britain, Greece, Italy and elsewhere.

Many have no plans to return. But some, underscoring a trend also emerging in other countries—Latvia and Mexico for example—are coming back to buy homes and open businesses.

Nearly one in three Albanian real estate transactions involves an expatriate buying property back home. “That means people see their future back in Albania,” said Evis Ruci, who tracks remittances for the central bank.


But some see drawbacks.

Much of the world’s migration is illegal, and although many immigrants work at menial jobs, some are doctors, engineers and other professionals. Their departure can mean a brain drain of highly trained personnel and create an immigration culture.

“Migration creates more migration,” said Ilir Gedeshi, director of the Center for Economic and Social Studies in Albania, whose emigrants have stashed an estimated $14 billion in foreign banks. “It’s a cycle. The next generation has to leave because there are no jobs being created for them here.”

Elvin Meka, secretary-general of the Albanian Association of Banks, offers a blunt warning: “We export human beings, and they send us cash,” he said. “Young people are addicted to the idea of leaving. That’s the biggest crime in this country. The government is killing their dreams.”

In the former Soviet republic of Moldova, globalization has unleashed a troubling exodus.

More than 600,000 of its 4 million citizens are believed to be working abroad, and since Jan. 1, 900,000 have applied for citizenship in neighboring Romania. Though emigrants sent back $920 million in 2006, more than the entire national budget, the trend has some officials wondering how much of a country will be left to govern.