Consumption and Remittances in Migrant Households: Toward a Productive Use of Remittances
| Autor: | Germán A. Zárate-Hoyos |
|---|---|
| Rok vydání: | 2004 |
| Předmět: |
Consumption (economics)
Economics and Econometrics education.field_of_study Labour economics Public Administration Population Devaluation Foreign direct investment Investment (macroeconomics) General Business Management and Accounting Gross domestic product Economics Demographic economics Remittance Real wages education |
| Zdroj: | Contemporary Economic Policy. 22:555-565 |
| ISSN: | 1465-7287 1074-3529 |
| DOI: | 10.1093/cep/byh042 |
| Popis: | 1. INTRODUCTION Globalization has created increased flows of goods and services as well as larger financial flows among nations. Although the number of people moving from their country of origin has not increased at the same pace as goods and services, the financial flows associated with migration, namely remittances, have steadily increased. Remittances worldwide increased from less than US$ 2 billion in 1970 to over $70 billion in 1995 (see Taylor, 1999). Interestingly, the world distribution of migrant remittances, like the trade and foreign direct investment flows, are very unequally distributed among a few countries. The top 10 remittance-receiving countries account for almost 50% of the total flow (Taylor, 1999). Because of the steady increases in its remittance flows, Mexico is a good case to study the impact of migrant remittances on growth and development. Since 1996, Mexico has been among the top three recipient countries with over $6 billion a year as of 1999, in 2000 Mexico ranked second (see Orozco, 2003). The new Fox administration in Mexico has taken a special interest in migration issues and in remittances in particular. (1) Among their concerns are the magnitude of the flows, the high cost of money transfers, and especially the productive uses of remittances. This latter concern has led to a few government proposals that have been put forward to encourage the productive uses of these monies. But there is scant empirical evidence to justify targeting migrant households already strained in economically depressed areas for investment projects. This article offers empirical evidence that remittance-receiving households are similar in their consumption patterns to households that do not. Therefore, recent government programs to channel remittances to productive investments should be targeted to the wider population. This article will briefly review the magnitude of remittance flows and then examine the consumption patterns of remittance-receiving households. A thorough understanding of the dynamics of remittances and consumption in migrant households in Mexico should inform policy makers of the best ways to channel these resources into productive uses. II. CONSUMPTION AND REMITTANCES IN MEXICAN HOUSEHOLDS The effects of remittances are not limited to the migrant households but extend to entire communities. Much of the literature seems to imply that remittances have few beneficial long-term effects on economic growth and development for the migrant-sending countries and often have negative consequences (Russell, 1986, 1992; Stalker, 1994). The contribution of remittances to development is inferred mostly from migrant household surveys that provide information on the uses of remittances. There is a general view from these surveys that remittances are mostly used for current consumption, while very little is spent on so-called productive activities. This should not be surprising given the multiplicity of factors that have affected the Mexican economy in the past two decades, such as bouts of inflation, sharp devaluation of the peso, significant reductions in gross domestic product growth and declining real wages. In addition, migrant households are said to engage in "conspicuous consumption," diverting resources from investment activities and exerting a negative impact on the consumption behavior of nonmigrant households. Although this claim is found to be without supporting empirical evidence, the alleged demonstration effect on the nonmigrant population and the lack of productive investment have led to the belief that migration has a negative impact on the development of migrant-sending regions. A comparison of the actual consumption pattern of households that receive remittances with those that do not at a given expenditure level should shed some light on these claims. Although remittance flows are becoming increasingly important in absolute as well as in relative terms to the economies of the migrant-sending countries, their measurement continues to be a problem. … |
| Databáze: | OpenAIRE |
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