Residents and their children spend time outside in their dilapidated homes in Petare, a slum in Caracas, Venezuela’s capital. /AP Yonhap News
While the number of people living in developing countries who are fleeing their home countries due to political oppression and economic difficulties is increasing exponentially, the remittance money they earn in other places and send to their families in their home countries has been found to account for an increasing portion of the country’s economy. An analysis has emerged that such an economic structure will further jeopardize the national situation in the long run.
The Wall Street Journal (WSJ) reported on the 6th (local time) the Saekye Bank’s announcement that foreign currency earnings in developing countries last year reached an all-time high of $647 billion (approximately 844.115 trillion won). It is a larger amount than development aid and is a phenomenon in countries with underdeveloped democracies.”
According to the WSJ, in Tajikistan in Central Asia, where the head of state has not changed for 30 years, remittances from immigrants working in Russia account for about half of its gross domestic product (GDP). One-third depend on foreign currency sent by family members working abroad.
WSJ said that this phenomenon has become more severe as the economic situation of developing countries has deteriorated since the corona and at the same time, the number of migrants heading to the United States and Europe has increased. An analysis of WSJ data in May of this year found that about 5 million people migrated to richer countries last year, an 80% increase from pre-coronavirus levels. This year, the U.S. Department of Labor said in its annual report that people born outside the U.S. accounted for 18.1 percent of the total workforce, the highest level since 1996, up from 17.4 percent the previous year.
Experts said that dictators, who are likely to lose their power if the economy collapses, are actively using immigrants to earn foreign currency. Tajikistan political scientist Navruz Nevasov said that migrant remittances “have an effect on stabilizing the regime” and that “dictatorships can basically stay in power as long as there is an exit for the people.” Venezuelan economist Engel Albrado said, “If you ask how people in Venezuela don’t starve, the answer is that at least one child lives abroad and they send money for food and medicine.”
Even in Cuba, which has been intensively discriminatory against immigrants since the 1959 revolution, it is also increasing its dependence on immigrants due to the recent deteriorating national economic situation. Last month, the Cuban Ministry of Foreign Affairs adopted regulations to make it easier and cheaper for Cubans abroad to return home, including extending passport validity and eliminating passport maintenance fees. According to The Economist, migrants remit between $2 billion and $3 billion a year back home, equivalent to 2 to 3 percent of Cuba’s GDP.
Some economists are concerned that if the share of remittances becomes too large for a country’s economy, it could cause problems, such as damaging long-term development. “When remittances exceed 5 to 10 percent of a country’s gross domestic product, they can start to become a problem,” said economist Cornell Pullenkamp.
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2023-08-07 05:08:41
