Report No. 1 (2016) - The Migration-Development Nexus

www.mediterraneanaffairs.com

The Migration-Development Nexus Analysis on the remittances of migrants in

Europe

Written By Giuliana Scalia

January 2016

Report No

01

Copyright© 2016 by Mediterranean Affairs

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Updated at 13th January

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Summary

The Migration-Development Nexus ...................................... 4

Introduction .............................................................................4

What do we mean by migrants' remittances? .....................6

Economic Remittances ............................................................9

Collective Remittances .........................................................12

Social Remittances .................................................................17

Why should the EU spend money and efforts towards

economic migrants? ..............................................................24

Conclusions and Recommendations ..................................31

References ............................................................................... 41

About the Authors ................................................................. 44

The Migration-Development Nexus

4


Giuliana Scalia

Introduction

Although the migration crisis has attracted all the attention on those

migrants escaping from wars, discrimination, and conflicts, another

category deserves major interest from policy makers. We refer to the

category of those leaving their country for economic reasons, looking

for better living conditions in a host country, the so called 'economic

migrants'.

In the past years there has been a relevantly growing rising interest

for the issue of migration and its relation to development in sending

countries. Scholars and policy makers have thus widened their

researches and have spread a more optimistic view on the matter. This

interest has mainly been based on a striking increase of remittances

flows1. As a consequence, these last years have seen a stronger belief

that remittances are effective means for income redistribution, poverty

reduction and economic growth in the country of origin.

There is ample evidence that both high skilled and low skilled

workers can generate numerous positive economic spillovers for

1 Remittances sent back to the country of origin have arisen from $31.1 billion in 1990 to

$76.8 billion in 2000 to $167 billion in 2005 (Hein De Haas, “Migration and Development:

a Theoretical Perspective”, COMCAD Arbeitspapiere- Working Papers No. 29, (2007):

7. bit.ly/1ldjeAu).

January 2016

5

receiving and sending countries. But how can migrants maximize the

development of both sides? Some important measure should be applied

to both in order to turn the diaspora into that source of capital, trade,

investment, knowledge and technology transfer that can be.

However, these years the EU has been dealing with a harsh economic

crisis affecting the wellbeing of some of its Member States, as well as a

migration crisis in the Mediterranean that has led to thousands of deaths

and consequent problems within the Union. Not to consider the

growing terrorist threat, which is heavily influencing the latest policies

on migration and security. As a consequence, it is become more and

more widespread the idea that migration is a security issue. And that the

main measure to 'fight' this phenomenon is putting barriers to migrants

at our borders.

But illegal migration is only one face of the coin of the whole

migration phenomenon, and although it is extremely important to deal

with it, the EU has never really considered the importance that

economic migrants can have for developing and developed countries.

Thus, why is it so important for the EU to deal with economic migrants?

What are the measures that should be implemented to maximize

migrants' remittances?


6

What do we mean by migrants' remittances?

Before examining into detail the literature about migration

remittances, we will provide some definitions on the main actors of this

process.

First of all, we should acknowledge who is at the basis of this process.

Migrants are fundamental actors in this, but little is known on what kind

of migrants use to remit more than others. In this respect, in this report

we will mainly refer to

economic migrants or to migrants'

diaspora. Each of these two

definitions expresses a

different aspect on

remittances, yet none

excludes the other. We will

explain why in the following

paragraphs.

Economic migrants are those migrants leaving their country of origin

for economic reasons, such as unemployment, lack of job

opportunities, low wages, financial problems, and reach a host country

for achieving a better standard of living and a higher financial income.

In reality, an official definition of economic migrants does not exist. In

fact, in recent times this definition has been often used to distinguish

asylum seekers from the rest of migrants landed to our shores.

However, the two categories cannot exclude each other. In fact, asylum

seekers can also be economic migrants when they do not only look for

Source: The Economist

January 2016

7

human rights and liberties, but also for better economic standards of

living.2

We consider of extreme importance to define the diaspora

community, a concept that has been misused and misunderstood many

times. Several definitions have been given to diaspora communities3.

Migrants have been referred as “nationals abroad”, “permanent

immigrants”, “expatriates”, etc.

Etymologically, the term “diaspora” comes from the Greek words

“to sow” and “over” and originally referred to the ‘seeding’ of Greek

colonies in distant lands4. Later on, the term was associated with forced

expulsion and dispersal of a community and the implied desire to return

to the home country. Today, it is very often mentioned in relation to

the scattered, people force to abandon their homelands and it often

associated to the Jewish community. However, in this regard, we use

the term diaspora to define a settled community of migrants in a

destination country whose importance lies in their being transnational,

living in one place but still maintaining strong relations with their

2 For instance, even if not appointed in the Convention of Geneva, those people escaping

from a natural disaster should be also considered refugees. Thus, in this case they are not

'political' migrants but again economic migrants that left their country for a safer place to

live and for increasing their economic and social conditions in a new country. 3 An example is: “members of ethnic and national communities, who have left, but

maintain links with their homelands” (Dina Ionescu, “Engaging Diasporas as

Development Partners for Home and Destination Countries: Challenges for

Policymakers,” (Geneva: IOM, 2006): 13. bit.ly/1Q2kdP6) 4 Kathleen Newland, “Beyond Remittances: The Role of Diasporas in Poverty Reduction

in Their Countries of Origin,” Scoping Study for the Department for International

Development, United Kingdom, 2004. bit.ly/1UTT8Pj.


8

homelands. Thus, the definition that is the most envisioned in this

paper is: “International migrants who, although dispersed from their

homelands, remain in some way part of their community of origin”5.

This definition refers to a community of dispersed people across several

countries that still maintains an affiliation to their home country.

The diaspora concept gathers together different issues and questions

of regarding time, place of birth, citizenship and identity/belonging.

First of all, it is difficult to clearly define when a migrant turns to be a

part of a diaspora. Given the transnational character of today’s society,

people can work abroad and then decide to return, or they can decide

to move permanently to another country. Secondly, does this definition

of “diaspora” include second- and third-generation migrants? Again, it

is difficult to limit the concept to the first-generation migrants because

there are many second and third-generation migrants born in the

destination country that have a strong feeling of belonging to the

country of origin of their parents. The same is valid for citizenship:

many migrants acquiring citizenship in the receiving country cannot be

excluded to the diaspora category because their sentiments of identity

still remain strong.

Since the main ‘migration actors’ have been analyzed, we can now

focus our attention on the part of development processes.

Development can be defined as sustainable economic growth, poverty

reduction but also as social advancement, human empowerment and

5 House of Commons International Development Committee (HCIDC), Migration and

Development: How to make Migration Work for Poverty Reduction, Sixth Report of

Session 2003-4, Vol.1, United Kingdom: House of Commons (2004).

January 2016

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socio-economic equity6. Of course, the development depends and

changes from country to country. So that first of all, policymakers

should understand what are the main development needs and gaps and

how the potential diaspora can contribute to them. Moreover, when

dealing with diaspora and their developmental ‘power’ we should

consider both the country of origin and that of destination. We can now

go back to the main question: what do we mean for remittances and

how are they classified?

In most of the studies made in the past years, remittances related

mainly to the economic benefit the host and home country can receive

from migrants. To put it simply, they are the financial returns migrants

are able to send back to their country of origin and at the same time the

country in which they have settled down. However, many scholars have

also identified social and political advantages that migrants can lead to

in the two countries involved: for instance, migrants can contribute

positively to the spread of democratic sentiments in their countries, or

they can push their government of their countries to adopt the respect

of human rights, etc. In this regard, types of remittances will be

described more in deep as follow.

Economic Remittances

From the World Bank website: “Personal remittances are the sum of

personal transfers and compensation of employees. Personal transfers

6 Ionescu, 21.


10

represent a broader definition of worker remittances. Personal transfers

include all current transfers in cash or in kind between resident and non-

resident individuals, independent of the source of income of the sender

(and regardless of whether the sender receives income from labour,

entrepreneurial or property income, social benefits, and any other types

of transfers; or disposes assets) and the relationship between the

households (regardless of whether they are related or unrelated

individuals)”7. As it can be noticed, when dealing with remittances in

general, they are regarded as to be automatically economic.

In fact, from an economic point of view many are the investments

and business transactions that a migrant can overtake towards the home

country. Most of the debate on economic remittances has focused on

the usefulness of these investments. In fact, the common reason for

scepticism on migration and development has been the assumption that

migrants rarely invest in productive enterprises but most of the time in

consumption or non-productive investments.

In some ways, the short-term effects of migration on livelihoods and

migrants’ household is negative in terms of the lost-labour effect8 But

as time goes by and migrants have settled down in a destination country

and found secure employment, the most basic needs of the household

such as food, health and education will be fulfilled and there will be

more possibilities for investments. It is only later that migrants invest

7 World Bank website, “How do you define remittances”, Section Data. bit.ly/1nnHRMB 8 De Haas, H., “Migration and Development: a Theoretical Perspective”, COMCAD

Arbeitspapiere- Working Papers, no. 29, 2007.

January 2016

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in ‘profitable’ enterprises (agriculture, housing, commerce). However,

this is not a rule and investments change according to the will of

migrants and other investments variables. In fact, the extent to which

remittances grow depends on the migrant social and economic position

in the receiving country as well as the investment conditions in the

homeland. Thus, according to these different variables, migrants can

remit back investing in land or in agriculture improvements or in

housing.

That being said, we should better the terms “productive

investments”, too. As we mentioned, not all investments in the

economy of the country of origin are productive for development. The

money remitted on education, health, food, medicines, and housing do

enhance the household well-being and as a consequence their

livelihoods, but cannot be considered “productive investments”. Land,

real estate are speculative investments and are a spontaneous response

to the uncertainty of the political and economic environments of the

home country. Hence, the small-scale production activities are more

within reach of the migrants’ families.

We have seen how migrants can direct their funds to individuals (or

household) or toward investments, but we have not dealt with the

funding of organized groups of migrants such as home towns clubs or

associations. Thus, we can say that three kind of economic remittances


12

can be distinguished: family/individual, collective and entrepreneurial9.

Since the main characteristics of remittances directed towards the family

and investments have been dealt before, in the next section the

attention is focused on the funding that the diaspora community can

spend on their community of origin.

Collective Remittances10

With collective remittances we refer to migrant groups’ or

individuals’ initiatives concerning the financing and launching projects

for their community of origin. These remittances are not used to cover

recurrent expenses and look more like non-profit donations than capital

investments. In fact, they are based on the idea of collective enjoyment

and not private gain.

The ties between the migrant community and their country of origin

can come in different forms, among which: strong family tie, the sharing

of geographical provenience, ethnic affinity, religion, profession, charity

sentiments, investments, political parties, culture.

Many different reasons and interests can lead to the creation of a

diaspora organization, network or association. It happens very often

9 This classification has been used first by Goldring in “Re-Thinking Remittances: Social

and Political Dimensions of Individual and Collective Remittances”, CERLAC Working

Paper Series, 2003. 10 Collective remittances can be also seen as social, political and economic remittances

because in most of the cases some money are invested in these organizations and in many

occasions these money are devoted to the social and political wellbeing of the left home

community.

January 2016

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that these interests are linked with the reason of departure of the

migrants’ community and their affiliation to the country of origin. Some

examples of these organization, networks and organization will follow:

Business networks:

These kinds of groups are very common among Diaspora. Some

acts as well established Chambers of Commerce within one country

while others are transnational. Information technology is very often

the mean to create and maintain ties among participants. The African

Diaspora Summit is exemplar in this regard 11. It was created by an

Afro-Dutch Diaspora organization and the main goal is to combine

the business interests with conflict resolution and believes in the

positive contribution of African communities living in Western

countries to development cooperation and economic development.

The importance of these associations lies in the fact that diaspora

investors can be a push factor for market growth and reforms.

Moreover, investments in the country of origin can also attract non-

migrant international investors.

Home Town Associations:

These groups represent structures in which migrants enter into

active citizenship and transnational societies. They are useful means

in the preservation of identity and at the same time they build social

and physical infrastructures in the home towns. Thus, they provide

services and activities such as: charitable contributions,

11 Other examples: the Armenia High Tech Council of America, the Silicon Valley Indian

Professional Association, the GhanaExpo, the Interims for Development (based in the UK).


14

infrastructure improvements, funding for human development

project on health and education and capital investment in profitable

activities. In this category we find associations that support schools

or mosques, repair infrastructure, provide scholarship for students

or reconstruction activities after a natural disaster.

Migration and development associations:

One of the most remarkable merit of the diaspora community is

their potential role in building social capital. Migrants abroad can

affect attitudes towards human rights, women’s rights, education,

employment or the use of violence12. To put it simply with an

example, the African Foundation for Development (AFFORD), is a

London-based charity which main aim is to connect Africans and

their organizations abroad for the only purpose of development of

Africans and the African continent. In doing so they designed a

varied number of projects in order to promote development in

Africa through different means: workshops, seminars, exhibitions,

meetings with agencies, donors, NGOs, awareness-raising

campaign, etc. 13

Diaspora networks on supporting conflict:

Armed conflicts or public disorder are also at the centre of the

attention of many diaspora groups. It has been noticed that diaspora

12 Newland, K., “Beyond Remittances: the Role of Diaspora in Poverty Reduction in their

Countries of Origin”, Scoping study by the Migration Policy Institute for the Department of

International Development, 2004. 13 The development object is also at the basis of many other associations: the Association

Migration Solidarité et Echanges pour le Développement in France or the gender-based Femme set

développement en Algérie again in France (Ionescu, 2006).

January 2016

15

often provides support to the conflicts of the home country. They

give financial support, or provide arms, manpower or transports.

One of the reasons why this happens is the distorted vision of the

conflict from a foreign country. In fact, thousands of kilometres of

separation and a relatively safe environment allow migrants to have

an idealized notion of the conflict in their homeland that obscure

the reality of the facts. Many examples made proof of this. In India,

the Gujarati Diaspora group was fundamental in supporting and

funding the rise of Hindu nationalist violence against Muslims and

Christians14. Even more remarkable is the case of Sri Lanka and the

Liberation Tigers of Tamil Eelam. This group was largely funded by

the Sri Lanka diaspora abroad that not only contribute with financial

support, but also with financial fundraising and arms smuggling.

The reasons that convinced migrants from abroad to do so were not

only the strong belief in the Tamil cause, but also the fact that the

illegal migrants and asylum seekers saw in the Tamil Tigers a

guarantee in case they are forced to come back home. Even the

widespread concern for the relatives left back in the homeland

played a role. Thus, the fact that many migrants move to another

country because of conflicts does not mean that they will not fund

another conflict or violence in their origin country.

Diaspora networks on moderating conflict:

However, sometimes diaspora are active actors in the moderation

of conflict and try to react by disapproving a particular action or by

14 The Hindu newspaper, “Foreign direct investment in hatred”, 23th March 2003.

bit.ly/1SUE3OU.


16

withholding aid to such actions. On the contrary of the

aforementioned case, migrants abroad can have a less passionate

and more objective perspective. For instance, the Irish Diaspora in

the United States played a role in convincing the IRA to accept the

Good Friday Agreement in Northern Ireland in 199815. Even the

anti-apartheid movement was an international network of South

Africans abroad that asked for international support. These

networks are not always driven by the civil society itself. Many cases

saw individual leaders (religious, ethnic, business, journalists, artist,

etc.) that fight to attract the attention of the population.

Philanthropy organizations:

Diaspora groups are very used to donate to charities and diaspora

organizations. These range from very small groups (or individuals)

donations to large and more organized community groups. The

Action for Children, for instance, is based in the UK and was founded

by Sierra Leoneans with the aim of helping child victims of the war.

Moreover, many of these charity projects are directed towards the

improvement of health, education or public works in the homeland.

This is the case of many wealthy Indians living abroad, for

instance16.

Scientific networks:

Of another kind, but worth mentioning, are the groups of scientific

diaspora that establish a relation between professionals through the

use of different channels, as the web or university links. Among

15 Newland, 2004. 16 Ibid.

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these groups we find: the Association des informaticiens vietnamiens de

France, the African Scientific Network or the Academia de Ciencias de

America Latina which main aim was and still is that of identifying

technicians and scientists in the region17.

All these groups, dealing with the different interests of a diaspora

community (from ending a conflict to business interests to importing

ideas), play a significant role in the country of origin. However, we

should take into consideration that not all these groups/organizations

enjoy the same power and consideration. Some are powerful and well

organized, some are significant just in one village while others at the

national level, some operate on a limited scale and some exist in name

only. Most importantly, not all these organizations consider the

reduction of poverty and development as priorities. However, these

groups are examples of how migrants in civil society can enter the

market, even with some state support.

Social Remittances

At this point we can focus on the category of social remittances, a

side often neglected. Economic benefits are not the only face of

migration and its nexus to development and culture should be

considered as a development enterprise. Migrants do not carry just

money from one country to another but also ideas, practices.

17 Ionescu, 2006.


18

As a consequence, one direction to study migration and its

connections with development has been to include elements that are

not strictly economic. Many scholars have focused on the social and

political advantages (or disadvantages) of migration in the sending

country. Peggy Levitt has defined social remittances as the diffusion of

different social practices, ideas, identities and social capital in the

country of origin after a migration process18. Nichols elaborated further

the concept defining these kinds of remittances as the knowledge, skills

and technology that comes to the country of origin together with the

returning migrants19. Again, Levitt and Lamba-Nieves talked about “a

migration of culture” and “migration as a cultural act”20. These practices

play a key role in the transnational collective formation, the social

impacts of migrants and their potential in the development of a

community. Many others have focused also on the political identities,

demands and practices that returning migrants can bring back to their

community. Thus, according to this view, migration is a multi-tasking,

multi-dimensional process that encompasses multiple arenas.

Social remittances have been usually classified according to three

categories: norms, practices and social capital.

18 Levitt, P. Social Remittances: “Migration Driven Local-Level Forms of Cultural

Diffusion”, International Migration Review, Vol. 32, No.4, (1998): 926-948. 19 Nichols, S. “Another Kind of Remittance: Transfer of Agriculture Innovations by

Migrants to their Communities of Origin”, Second Colloquium on International Migration. 2002. 20 Levitt, P. & D. Lamba-Nieves, “Social Remittances Revisited”, Journal of Ethnic and

Migration Studies, Vol. 37, no. 1, (2011): 2. They also asserted: “It is not when or that these

practises or identities may be cultural but rather that they are inherently cultural”.

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Normative structures of remittances:

Normative structures are ideas, values, beliefs that include also

interpersonal behaviour, intra-family responsibility, and principle of

community participation and aspirations of social mobility.

Moreover, they can, for instance, include the expectations toward

organizations and institutions (how the church, the state should

work). As we have already seen, the circulation of these moral

norms is not always positive: migrants can bring back to their home

country models that can look negative. Also, migrants' behaviour

changes upon return according to the status they have acquired in

the receiving country.

Practices:

Practices are the actions shaped by normative structures21. There

can be individual as well as organization practices. Individuals’ one

include, for instance, religious, civil and political practises while

within the organization we can find modes of socializations,

strategies, leadership and intra-organizational contacts.

Social capital:

The definition of social capital has been addressed by many scholars

and according to many different perspectives. From the social point

of view, social capital includes social networks and norms within a

21 Levitt, 1998.


20

community which are implicit in the institutions and relationships22.

Social capital is fundamental for an efficient economy. The

combination of values, norms and practises along with interactions

between individuals and groups have given rise to a useful social

capital to development. Many researchers have underlined how

migrants have acquired a particular status in the country of

destination and have then brought it back to the country of origin.23

The effects of social remittances have risen from many empirical

researches. First of all, it has been proved that social relations affect

economic transfers. Migrants send money to the groups they are

interested in, as a kind of social insurance.24 Secondly, migrants can be

useful disseminator of information and influence when they come back

visiting or they settle back to their homeland. As a consequence, new

values enter the country of origin: these can be values on marriage and

fertility, on education or even values on gender and class stratification.

However, the influence is not always positive and some values can

worsen the social capital brought back.

Migrants can also remit new political values. This is why some

scholars have also mentioned the existence of political remittances.

22 Nassar, H., “Migration, Transfers and Development in Egypt”, Research Reports, European

University Institute, No. 1, 2005. 23 They have found this behavior in Vincentian and Grenadian immigrant leaders and

activists who used their prestige and new status they have acquired in the United States

to take advantage at home. 24 A study by Kurien (2008) have observed the flows of money in three different Indian

villages. The Muslim one tended to put their money in circles of community members;

the Hindi one preferred the life-cycle rituals; while the Christian village supported family

expenses (Levitt, P. & D. Lamba-Nieves, 2011).

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Some have seen in migrants the main actors in generating changing

balance of power among different groups, new policy initiatives and

also strengthening or weakening political institutions. It should be

mentioned that this happens through social channels and the influence

of specific cultural orientations and social norms. Again, this process is

not always positive for development. New aspirations among the young

community can lead them to invest less in local institutions and more

in consumption items or can also increase their religious identities and

violence.

All the characteristics seen in the past pages can give us a relevant

overview over the benefit migration can have for home countries. We

have seen that these benefits can in some ways lead to not only an

economic but also to a social and political development in countries of

origin of migrants. But, what about destination countries? What are the

benefits for host countries?

Many researchers have underlined the positive impact that

immigration can have on developed countries. In particular, many

scholars have made evidence of how immigrants affect positively the

economies of destination countries.

Host countries tend to improve their economic and social

development with immigration flows because:

migrants tend to increase the workforce;

migrants are able to fill the holes in both fast growing and

declining sectors of the economy;


22

they contribute to labour-market flexibility;

they contribute in taxes and social contributions;

with their skills, they contribute to human capital development

and to technological progress;

they can contribute and facilitate transnational cooperation25

promoting co-development strategies.

Thus, immigrants can have a positive role on the economy and can

contribute to its development. They are involved in growing

occupations such as health-care, and occupations related to science,

technology, engineering, and mathematics. But, at the same time, they

occupy the most strongly declining occupations that native-born do not

want to undertake (for instance, the craft and trade sectors, manual jobs,

etc.). What for the native seems unattractive or worthless, the migrant

in need will fill that position contributing also to the improvement of

declining sectors26 .

Moreover, the myth of immigrants benefitting from state

contributions more than the natives should be eradicated. In fact,

migrants contribute more in taxes and social contributions than the

benefits they individually receive27.

25 Many times, host countries decided to involve diaspora groups for development plans

and policies (Ionescu, 2006). 26 OECD (2014), “Is Migration Good for the Economy?”, Migration Policy Debates,

2014. 27 Ibid.

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Employment-related, immigrants can introduce relevant fiscal entries

in many OECD countries in which migration reaches high levels. After

all, most of them emigrate to find a new job and improve their life and

that of their family. Directly or indirectly, migrants tend always to

improve the economic performance of one country.

Their impact is also demographic. They do not only increase the size

of population, but they reduce the dependency ratio. In fact, the

majority of them are young aged and with the willingness of working,

they will reduce the generational turnover in all countries and increase

the number of the active population. Their being young and educated

means importing to a new country new skills and capabilities and

enriching the human capital of that country. This contributes to boost

research and innovation.

In conclusion to this first section, we can say that migrants can have

relevant roles in the developmental process of both the country of

Source: BBC News


24

origin and destination. If in the host country these positive effects relate

mainly to the economic and financial sphere, the home country can

benefit both economically and socially from its citizens abroad.

Why should the EU spend money and efforts towards

economic migrants?

We all know that the European Union lately has been struggling on

the topic of migration. The continuous flows and the numerous deaths

in the Mediterranean have put to test the fragility of the Union that had

to face different aspects related to immigration: the refugee status,

irregular migration, the state of terror of Daesh and the related security

measures. Given the urgency of the migration crisis in the

Mediterranean, it is normal that the economic migrants and the

remittances topic have been put on a shelf. However, the growing

phenomenon of irregular migration as well as the growing conflicts in

the Mediterranean area and consequently the growing number of

refugees, are jeopardizing the high number of economic migrants and

highly skilled migrants that come in EU legally (but sometimes even

illegally) and with specific working objectives.

Through some specific data on the EU, we can understand how the

potential of remittances is undervalued and how remittances can be an

important source of income for EU countries.

By 2014, migrants accounted for the 70% of the increase of the

workforce in Europe and contributed significantly to the labour-market

January 2016

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flexibility. Despite the common thinking, migrants have represented,

since 2000/2001, the 14% of the highly educated labour force and the

15% of entries into growing occupations in Europe. Not to mention

their contribution to the declining occupations in Europe. Migrants

occupied about a quarter (24% in Europe) of entries into declining

occupation (from craft to machine operators, assemblers, etc.)28 . To be

more precise, in 2014 Italy, United Kingdom and Spain ranked as the

main sending countries of remittances.29

The changes in remittances have been characterized by changes in

migration flows. One of the peaks ever reached by Europe was in 2003

when remittances reached US$93 billion30 .

The importance of remittances has been recognized by the European

Commission that acknowledged the relevance that these financial

transfers can have both outside and inside Europe. Annual financial

transfers in the EU reached about €30 billion to countries outside the

Union and almost €8 billion within the Union31 . The data of the World

Bank (2015) registered also the migration flows of all countries all over

the world and many European states ranked in the first positions. In

particular, Germany figures out to be the third migrant-receiving

28 OECD, 2014. 29 The highest number of remittances come from United Kingdom that awarded $25.115

billion departing from migrants living in its territory; followed by Italy ($16.152 billion)

and Spain ($16.015 billion) (World Bank, 2015a). 30 Hussain, Mushtaq, “Measuring Migrants Remittances: From the Perspective of the

European Commission”, European Commission Eurostat, Unit C4, (2005): 1-5.

bit.ly/1Q3kL7c. 31 European Commission, “Workers’ Remittances”, 2012. bit.ly/1UVcfsb


26

country in the world after the United States and Saudi Arabia with 11.1

million migrants, followed by the United Kingdom (7.8 million), France

(7.5 million), Spain (6.6 million) and Italy (5.8 million)32. Eurostat also

identified the main corridors of remittances within and outside EU. In

2008, the top ten most important remittance corridors identified were:

from Italy towards China, Philippines and Romania, from Spain

towards Colombia, Ecuador and Bolivia, from France towards Portugal

and Morocco, and from Germany towards Turkey and Italy33.

The influx of remittances is important in some of the EU Member

States. In 2009 they fell to €18.0 billion, down from €21.7 billion in

2008. The biggest receiving countries in 2009 were Spain, Romania,

Poland, and Portugal. Remittance inflows came mainly from other

Member States (70% of inflows were intra-EU in 2009). In 2008 the

main corridors were to Romania from Italy and Spain, to Spain from

the United Kingdom, Switzerland and the United States, to Portugal

from France and Switzerland, and to Poland from the United Kingdom.

When remittances reached the receiving country they represented not

only a source of household consumption but also a relevant income of

foreign exchange. As a proof of this, in Romania, Poland, Portugal and

32 World Bank, “Migration and Remittances: Recent Developments and Outlook”,

Migration and Development Brief, 2015a. 33 Comini, Daniela and Faes-Cannito, Franca, “Remittances from the EU Down for the

First Time in 2009, Flows to non-EU Countries More Resilient”, Eurostat Statistics in

Focus, no. 40, (2010): 1-8. bit.ly/1Pxjy5k.

January 2016

27

Bulgaria, net remittances made a substantial contribution when it comes

to balance a negative current account34.

European countries were also classified as remittances-receiving

countries and the data showed by the World Bank (2015) should not be

underestimated. In fact, among the top ten remittances-receiving

countries in the world, two European countries figure: Germany (US$

17.5 billion) and France (US$ 24.6 billion). Moreover, other European

countries demonstrated to benefit from migrants remittances. The

World Bank showed also that Spain, Italy and United Kingdom are also

taking advantages from remittances35. As we have already seen, it is

important to underline that not all migrants (and not all economic

migrants) live outside the EU. In 2014, migrant workers in Europe sent

an amount of $110 billion to their home countries that were European

countries. In fact, most of the remittances flowed from wealthier

European countries to poorer ones. Despite Europe has just the 10%

of the world population, it hosts the 20% of all migrant workers and

the 26% of remittances36 . According to these data, the top European

34 Without remittances, the current account deficit recorded by Romania and Poland in

2009 would have been 55% and 54% higher, respectively. 35 Spain received an amount of US$ 10.5 billion, Italy US$ 9.9 billion, United Kingdom

US$ 5 billion in 2015 (World Bank, 2015b). 36 IFAD, “Sending Money Home: European flows and markets”, 2015.


28

sending countries have been classified to be Hungary, Poland and

Romania.

Thus, in Europe 19 countries are relevant remittance receivers, for a

total of US$46.5 billion: 79% originating from Europe and 21% from

the rest of the world37. Ten of these are European Union Member States

that received US$20 billion in remittances (that is 66%) from migrants

in EU sending countries. Countries of origin of these remittances

outside Europe are mainly the United States and, to a lesser extent,

Turkey38 .

37 Ivi, 17. 38 Ibid.

Figure 1. European remittances. Flows to Europe and the world

Source: IFAD 2014

January 2016

29

EU host countries also benefited from the diaspora for facilitating

transnational cooperation. Consulting the diaspora on the

implementation of development plans and policies have proven to be

successful in EU. For instance, in 2003 the UK and its International

Development Committee have involved in an inquiry the Sierra Leone

diaspora. The British Department for International Development

launched the Indian Country Assistance Plan consulting the Indian

diaspora in UK. Many other EU countries used the same method for

development projects. In 2002 until 2004, France funded €2.6 million

to involve Malians in developmental projects concerning education and

small businesses in Mali39 .

Moreover, the diaspora community has been used for a co-

development approach between host and home countries. France

39 Ionescu, 2006.

Table 1. Share of flows within Europe and the rest of the world

Source: World Bank 2014


30

launched co-development projects in 2000 promoted through

conventions with Senegal, Mali, Morocco and the Comoros to regulate

the mobility of migrants and their involvement in the host country

community. Even Italy launched a development program with Senegal

concerning the promotion of the Senegalese diaspora and financial aids

for small and medium enterprises40. These programs of co-development

were not aimed at encouraging returning migrants nor they wanted to

increase migration flows, rather they were based on reducing migration

pressures and encouraging potential migrants to find opportunities in

their home countries rather than abroad. In this sense, involving the

diaspora community in personal strategies has affected both the home

and host countries. Not only their contribution is fundamental for the

host country to cooperate with third countries, but it also helps the

diaspora in acquiring legal, political, social and economic status in

destination countries.

The data on remittances inside the European Union are not

satisfactory as those characterizing the remittances flows all over the

world41. Still, they have importance and should not be overlooked by

policymakers. The European Commission identified some major moves

in order to increase the amount of remittances and to make them

profitable for both the host and home country. For instance, the

Commission underlined the importance that collecting data on this

40 Ibid. 41 The World Bank Group's Global Knowledge Partnership on Migration and

Development (KNOWMAD) declared that in 2015 international migrants would have

sent $601 billion to their families in their home countries (World Bank, 2015a).

January 2016

31

topic can have. For instance, many entities (e.g. Eurostat or IOM) can

provide evidence of the positive and negative aspects of the

phenomenon and can shed some light on whether and how migrants

can be agents of development. Another point was that fees imposed to

the migrant should be reduced while financial advantages on

international transfers should be extended to different currencies. High

costs of transferring money should be reduced and the overall system

of transfer should be characterized by transparency. Then, the EU

Commission proposed of improving the developmental impact of

remittances through two main measures: facilitating the access to

banking and financial services in developing countries and the

promotion of projects in support of entrepreneurship42. However, the

European Commission did not update this document from 2012 and

from that date on there is no mention to remittances and migration

among EU documents and proposals. It is clear that the topic is not

among the priorities of the EU and its Member States.

Conclusions and Recommendations

The overall picture of the situation is clear: remittances are relevant

to development and researches and empirical studies have proven their

importance in both developing and developed countries. However, this

is not enough for European countries to adopt significant measures

towards the improvement of remittances. In a sense, this cannot be

42 European Commission, 2012.


32

condemned at all if we think about the migration crisis of these years.

Debates on economic migrants have been put on a shelf because civil

wars and conflicts occurring in the Mediterranean are producing not

only continuous migration flows, but also illegal migration flows.

However, the number of economic migrants is still growing and they

are still an important share of the migration flows of the last years. Thus,

if refugees should be welcomed and hosted because they deserve it and

there are regulations on the matter, economic migrants should be

welcomed and hosted because on the long run their presence can

improve the economic performances of their destination countries and

most importantly of their home countries.

The thoughts of scholars of the past years and of today about this

topic have been controversial. In fact, remittances are not one-way. The

concept itself of remittances should be clarified. Many scholars have

focused and limited their researches on economic remittances which are

clearly a relevant part of the debate on the contribution of migration on

remittances but they are not the only factors to be considered in this

process. Thus, social (and, to al less extent, political) remittances have

been discussed to give an overall view of the past and present researches

on this topic. The socio-political dimension of remittances is important

for reforming domestic policies in host countries and shaping a better

society in countries of origin. However, it cannot be ignored the brain

drain that can occur. It is impossible to stop highly skilled migrants from

leaving their home countries, and stay-at-home policies and barriers at

January 2016

33

the borders of d estination countries have proved to be

counterproductive.

Another point that should not be underestimated is the economic

crisis that is affecting the EU in general and some EU countries in

particular. This economic storm is another reason why the Member

States have shifted their interest from remittances. The overall opinion

among Europeans is that European citizens come first, and

employment opportunities and facilities should be provided to them

first. What this widespread thought ignores is that migrants can facilitate

the regression of the crisis. In fact, while some migrants remain outside

of the job market in host countries, others are making their best to enter

it and help their families back home. The crisis has affected them in the

same way as Europeans and many are reducing their daily expenses and

have taken up more than one job to secure a better standard of living

Source: Mail & Guardian Africa


34

to the household.43 Despite the economic crisis involving many

developed countries, many European citizens are avoiding manual and

strenuous jobs that migrants accept because of their desperate financial

conditions. Not to say how beneficial highly skilled migrants can be. In

fact, the common (and mostly wrong) image that host countries have

of migrants is that of poor people with very low levels of education

escaping from wars or coming to our country to 'appropriate' European

citizens' job opportunities. What the common opinion omits is that

some migrants have also high levels of education and not all the

refugees escaping from a conflict are low skilled. Many migrants coming

to developed countries were doctors, professors, lawyers, etc. All these

migrants (even simply graduated migrants) with their educational

background can bring to the destination country new knowledge and

innovation that is needed in a recession.

The suggestions launched by the Commission cited before would

have been very useful if implemented by the EU and all its Member

States. However, not only the suggestions became outdated and have

been forgotten, but also there is a widespread lack of knowledge on

remittances and its most recent trends. Despite this, many scholars and

researchers, thanks to empirical evidence, have formulated some

43 For instance, despite the scepticism among developed countries, the International

Organization for Migration has underlined the role of Filipino overseas that despite the

economic crisis, are remitting back to their country of origin. See IOM, “Why Host

Countries Must Help Migrants Weather the Economic Storm”, Geneva, 2009.

bit.ly/1U281yY.

January 2016

35

suggestions and policy recommendations on how to improve the

remittances system in both the country of origin and that of destination.

From the very beginning of the report, we have understood that the

main trigger factors for leaving the country of origin have been low

income and unemployment. Thus, any government should create new

job opportunities. This can be realized by attracting foreign direct

investments or the private sectors.

Also, emigration-oriented policies and opening new markets for

labour force should be applied44 . From the hand of the country of

origin, bilateral agreements with European states should improve

labour mobility and the way it works. Of course the creation of new job

opportunities goes hand in hand with decreasing irregular migration

streams to Europe. As many foreigners do not find any opportunity in

their home country, they tend to go abroad with the means they have

and their labour force is channelled to the market of a foreign country.

Emigration-oriented policies should thus include job matching schemes

and pre-departure training for migrants.

The most effective policies seem to be the ones that include the

improvement of the legal position of migrants as well as their social and

political context in the sending country. This should be always met with

a better investment climate and legal security so that migrants are keener

to return and to invest in the country of origin and in some cases in the

44 Zohry, Ayman. “Egyptian Youth and the European Eldorado: Journey of Hope and

Despair”, DIIS Working Papers No. 18, 2006.


36

country of destination. Remittances can be a great stimulus to

development. However, there should be the right means and

development conditions in the sending country.

Among the policies that fit the most these conditions we find those

policies that governments and development agencies use to facilitate

remittances flows. For instance, sending countries should reduce

transaction costs of remittances45 as well as increasing the security of

transfers. Moreover, the promotion of special fiscal policies, the

establishment of foreign banks and the possibility of opening foreign

currency accounts should be added to the sending countries' agenda46.

Financial services should be extended to people in need, especially those

coming from rural areas47.

On the political and social sides, dual citizenship, voting rights,

property rights, saving schemes are all services that should be provided

to every migrant living abroad. In particular, granting dual citizenship

appears to be one of the most significant measures that make the

migrant feeling their transnational belonging. In addition, the access to

all these policies should be regulated by simplifying the bureaucratic

procedures that very often are an obstacle to the success of these same

policies.

45 Banks and money transfer agencies usually make a lot of profits on remittances (De

Haas, 2007).

46 De Haas, 2007. 47 Newland, 2004.

January 2016

37

Regarding collective remittances, governments of origin and of

destination should sustain the numerous self-help organizations created

by migrants in the host country that have been established with the aim

of promoting development in sending countries. This should include

the encouragement of collective remittances by offering to these

organizations technical assistance, matching funds, marketing assistance

or with business and financial services.

Another important issue is the definition that the EU gives to

remittances. The most common and general definition "goods and

financial instruments transferred by migrants living and working in new

economies to residents of economies in which the migrant formerly

resides"48 does not represent the phenomenon in its totality. In fact, it

puts apart the significance of social and collective remittances that even

though are more difficult to classify and identify, have their relevance

and should be enhanced just as much as economic remittances are.

Moreover, the definition excludes some very common cases: for

instance, when a migrant send money to a relative outside of its country

of origin and when the migrant uses all the very usual informal channels

for sending money to the relatives. As a consequence, a core and

complete definition of what remittances are and how EU countries

could benefit from them should be provided.

Other more general recommendations should be considered when

dealing with migration benefits. One of the most frequent complain

48 Hussain, 2005.


38

among migrants has been the high level of corruption and the lack of

some political and social liberties. Thus, political stability and

democratic institutions are fundamental when dealing with diaspora

policies. Poor infrastructure, underdevelopment, lack of transparency

and a weak investment climate are the main factors determining policy

failures. In the same way, the feelings that the diaspora communities

have towards their home countries can make a difference in the way

policies are built. Reluctance, resentment and any form of

discrimination can harm the relationship between the migrant and the

homeland but also between the migrant and the host country.

Strengthening trust can be one of the measures that governments

should adopt. For instance, governments should respond to diaspora

requests on citizens’ rights and their banking needs and should simply

encourage a stronger dialogue through medias, websites and regular

meetings.49

Another factor that any government should take into consideration

is that migrants abroad are not a homogeneous group. In fact, many

surveys have made evidence of the large amount of differences that

exist among them (in terms of age, gender, occupation, education) and

the different needs they have. Decision makers should acknowledge

these differences and uniform the different needs of the diaspora

community to different policies.

49 However, the symbolic inclusion of the migrants to the homeland reality should be met

with practical inclusion through rights, partnerships and technical arrangements (Ionescu,

2006).

January 2016

39

Finally, one of the most important suggestions to host governments

is the cooperation with countries of origin in which migrants are hosted.

As a consequence, pro-diaspora policies should be combined with

integration policies in the host countries. If these policies are well

regulated and the cooperation between the two countries is stable,

migrants will be well integrated in the host country but at the same time

they will maintain strong links with their homeland. When these two

conditions are not met, the migrants' communities constitute an isolated

entity and maintain a low profile in the destination countries. By doing

so they have fewer resources and their contributions to both the

countries is very low and limited.

Unfortunately, at the present time, there are few policies on diasporas

that have actually been carried out by any European government. From

the lack of transparency to the lack of information on investment

opportunities, the relationship between the host country and its

migrants is still weak and hampered by the lack of trust.

However, the main purpose of this paper was to underline the

importance that remittances can have on the country of origin and on

destination countries in particular. Remittances can mean a significant

increase in income and improvements in the living conditions,

education, health and welfare among migrants abroad. When some

measures are applied, remittances can also be the source of investments

and thus a stable source of foreign currency. This is not to say that

remittances can put an end to any form of poverty. They are just a small

percentage of income at the moment for the country of origin, but if


40

promoted and improved and if accompanied by other developmental

measures, remittances can be useful means for the economic, social and

political development.

In conclusion, it can be said that migrants' remittances tend to have

a positive developmental impact on the migrants' household and

contribute to the willingness of migrants to invest. However, there is

still a need to improve the means towards which remittances can be

channelled and invested and through which they can maximize the well-

being and living standards of both migrants abroad and the community

of the destination country. Developed countries should understand that

the solution to irregular migration is not closing the door to migrants

and fall into xenophobia, because in this way, the migrants and their

families will lose out as the host countries and its communities will.

When policymakers will acknowledge that the contribution of migrants

can contribute to long term development goals, all destination countries

(as well as the migrants' homelands) will benefit from these flows.

January 2016

41

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44

About the Authors

Giuliana Scalia

Graduated with a Bachelor’s Degree in Languages and Literatures at

University of Catania. Master’s Degree in Global Politics and Euro-

Mediterranean Relations held in the same university presenting a thesis

about Egyptian remittances and their contribution to the Egyptian

development.

January 2016

45

Ed. Mediterranean Affairs©

www.mediterraneanaffairs.com

Cover image source: Mediterranean Affairs

http://www.mediterraneanaffairs.com/


46

Report No. 1 (2016) - The Migration-Development Nexus

Documents