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Return to Sender
By Karsten Paerregaard
Woodrow Wilson Center PressCopyright © 2014 Karsten Paerregaard
All rights reserved.
The Social Life of Remittances
This book is about money: big money, more money than you can count or than Bill Gates will ever make. It is what Donald Terry has called "the case of the missing billions" (2005): the remittances that international migrants send home every year. In 2013, the world's 232 million migrants, representing a mere 3 percent of the total population, remitted $414 billion to developing countries, the second-largest capital flow in the world after private investment (World Bank 2013a). Money, however, is not the research topic of this book or my reason for writing it. Although most migrants hope to make money in dollars, euros, yen, or other hard currencies, it is the well-being of their relatives and communities that is the true motivation for their adventurous travels to foreign parts, not the pursuit of personal wealth. In other words, money is merely the means to loftier goals.
My aim in writing this book is to shed light on the moral economy of remittance activities: that is, the motivating forces that drive migrants to remit money home and the meaning and importance that their families and communities attribute to their remittances. I explore the circumstances and tensions in migrants' lives that prompt them to remit money home and describe the predicaments and concerns that affect both ends of the remittance chain. This chain is, of course, influenced by broader general issues such as migration, globalization, and development; while the book's ethnographic contribution consists of describing the personal trajectories, family affairs, and social networks that shape migrant remittances, it is only by examining the wider economic and political contexts that the book can provide a full account of their importance.
Although the economic importance of remittances has been overlooked for a long time, the role of migrants in the world economy is gaining increasing recognition (e.g., "Weaving the World Together" 2011, 72–74). As a result, information on the numbers of international migrants and migrant remittances is plentiful, and studies of their economic and social impact on the sending countries—that is, migrants' countries of origin—have proliferated in the past decade. Recently, this knowledge has been put to use by consultants and scholars working in international institutions and development organizations, such as the World Bank, the Organisation for Economic Co- operation and Development (OECD), the International Organization for Migration, the International Monetary Fund, and the Inter- American Development Bank. These organizations have designed policies promoting remittances as a means of boosting growth in the developing world. The idea of channeling migrants' earnings abroad into investments at home has been welcomed by many sending countries and has paved the way for a new perspective on migration. Migrants, who were formerly regarded by many governments as "lost human resources" or even as "traitors" who had turned their backs on their home countries, are now heralded by the political leaders of sending countries in Asia, Africa, and Latin America as "saviors" and "heroes" in the hope that they can help solve domestic problems such as unemployment and underdevelopment.
Although this shift in the political view of migration represents an important step in the recognition of migrants' contribution to the economies of both the sending and the receiving countries, it has led many governments and international institutions to assume that remittances are free flows of capital that they can tap into whenever they need to. Indeed, few politicians and policymakers bother to ask why migrants remit in the first place. Why do some continue to remit for decades—some even throughout their entire lives—while others send money home only once or twice? And what makes migrants remit at particular moments in their lives and then stop remitting at others? More bluntly, what is the driving force behind remitting?
The book's message is that, just as business owners and corporate leaders have to know where the money that makes their businesses profitable comes from, so policymakers and politicians who promote remittances as a means of boosting development need to ask what makes their "clients" or "customers" invest. How long can they expect them to do it? What makes them expect that the money will keep flowing? In a review of the policy papers as well as the scholarly literature on remittances, it is surprising how rarely these questions are raised and how few researchers and policymakers have asked who "the goose that lays the golden egg" is and why "the goose" does it.
Classical economists, who believe that all economic activities serve utilitarian purposes, argue that remittances are driven by altruism, that is, that the recipient's use of remittances is identical with the migrant's own utility (Agarwal and Horowitz 2002). But if this is the case, why is the second-largest capital flow in the world fueled by "irrational," altruistic behavior? In what terms, if not economic, do we account for such transfers? Other, more sociologically oriented economists, explain remittances as a "gift" from migrants to their relatives back home. Dilip Ratha, a World Bank expert in Washington, D.C., who is considered one of the founding fathers of the institution's policy of promoting remittances as a development tool, told me that it was his own personal experience as a migrant remitter that triggered the notion of remittances as gifts. He said, "I've been sending money to my mother in India on a regular basis for many years" and pointed out to me that "remittances are a gift" (Dilip Ratha, personal communication, December 2009). Of course, by using the term gift the World Bank expert touched the heart of my anthropological soul, which regards the act of exchange as a basic structure in human life. Indeed, few if any in my scholarly field would argue against this expert. As Marcel Mauss (1966) pointed out in his classic work, the gift is a carrier and extensor of social and cultural values that simultaneously creates obligations. But even so, what happens when your parents back home die or you become reunited with your family in the receiving country? Do these changes lead you to stop remitting, or do other family responsibilities then take over? And, perhaps more important, what does the migrant ask in return for the gift? Do hard- working migrants who remit most of their earnings to their spouses or children back home not expect the latter to use the money wisely? Do they not try to influence the household's decisions in their absence?
Most remittance studies and policies are directed toward the impact of remittances on migrants' home regions and their significance for developing-country economies. These studies and policies rest on the assumption that, as long as people migrate, money will keep flowing. This book questions this assumption and suggests that remittance flows fluctuate and change size and direction according to the needs of migrants and their relatives. Some migrants continue to remit to their aging parents for years, but others remit only once or twice in their lives, and some even receive money from their families at home.
To study the social life of remittances, I conducted an ethnographic inquiry into migrants' life trajectories and webs of relations and into the interactions and negotiations that tie them to their relatives and communities in their places of origin and the social meaning and moral value those relatives and communities attach to remittances. I review field data gathered between 1997 and 2011 among Peruvians in Argentina, Chile, Italy, Japan, Peru, Spain, and the United States to explore how migrants construe and fulfill their remittance commitments. Such engagements include their family commitments to support their parents, spouses, children, and other close relatives in Peru; their community commitments to finance development projects and religious events in their home regions; and, on a more irregular basis, their humanitarian commitments to aid other Peruvians when these fall victim to natural disasters and other misfortunes. To challenge the conventional picture of migrants as low- paid, unskilled family breadwinners whose only concern is to remit money home, I also examine migrants' individual commitments, that is, their dreams of achieving social mobility and making progress. By bringing migrants' personal talents and skills to the forefront, I illustrate the variety of ways in which they contribute to the development and welfare of the surrounding society, not merely as remitters but also as businessmen and women, entrepreneurs, artists, politicians, fund- raisers, managers, innovators, and leaders.
Remittances draw our attention because individuals who are poor and underprivileged are moving huge amounts of cash around the world. Yet, remittances do not flow like other forms of international capital but circulate between family and community members who are separated by national boundaries but who are nevertheless linked by relations of reciprocity and exchange. Remittances are therefore only the tip of the iceberg, the visible evidence of the many needs and demands that drive people to go abroad to work and save money and the personal efforts and sacrifices they make to send that money home to their relatives. Such endeavors have been the topic of my research for many years. In the late 1980s and early 1990s, I studied internal migration in Peru, which in the past 50 years has experienced a transformation from an underdeveloped, mostly rural society to a predominantly modern, urban society (Paerregaard 1997). Since 1997, I have followed Peruvians in their global odyssey in the Americas, Europe, and Asia and have documented how they form communities and create ties with other minorities and the majority population of these places (Paerregaard 2008a). By focusing on remittances, this book brings me back to Peru and asks what commitments migrants make to their families and communities back home and how Peruvian society, the receiving societies, and the migrants themselves profit from these commitments.
Remittance Men and Women
The verb remit originates from the Latin word remittere, to send back. Although in modern English the word has many meanings, in this book remitting refers exclusively to the act of transmitting or sending money, with specific reference to the money that international migrants working in the developed world send to their home countries.
As already noted, migrant remittances represent the second- largest capital flow in today's globalized world, and in recent years they have become an important focus of the international organizations and aid agencies that promote economic development in developing countries. Yet bankers, financers, and wealthy individuals have remitted money for centuries, just as the wider society has made such transfers the subject of its moral appraisal. In the late nineteenth century and the first decade of the twentieth century, the younger sons of Britain's aristocracy, at a time when first-born sons inherited the estate through the law of entail, were often known as "remittance men." With few prospects for making a life of their own, these men went abroad to North America and Australia or the colonies, where they lived off the money sent by their families in England. While some prospered, others spent the rest of their days drinking, gambling, and wasting their time in other ways. Considered the black sheep of their families, these men became the subjects of literature such as Robert W. Service's poems "The Rhyme of the Remittance Man" (see the epigraph to this book) and "The Men That Don't Fit In," along with many others a century ago. Today's remittance economy is driven by constraints very different from the discriminating rules of inheritance that drove the younger sons of the British upper class into exile at the end of the nineteenth and beginning of the twentieth centuries. The "remittance man" in Service's poetry went abroad to live off his relatives' remittances; today's international migrants also travel to foreign places, but instead of receiving money they send it to their families back home. Remittance senders and receivers, in other words, have changed roles, and the "remittance man" is now acting as the provider rather than as the dependant. Moreover, remittances no longer aim to preserve the privileged position of the wealthy but to compensate for the lack of job possibilities and economic income of the underprivileged. Remittances continue to flow from the developed to the developing world, but their origin and aim have changed since the time of Service's "remittance man."
The bulk of today's remittances are sent by migrants from the developing world. Yet a brief look at the list of countries receiving remittances reveals that the remittance industry reinforces rather than restructures the unequal distribution of wealth in the world (table 1.1). In sheer numbers, India, China, the Philippines, and Mexico rank as the main receivers of migrant remittances, but they are closely followed by developed countries such as France and Germany, whose expatriate workers send home millions of dollars every year. Obviously, the contribution these workers make to the national economies of their home countries is relatively insignificant compared to the role that migrant remittances play in the economies of many developing countries. It is therefore these developing countries and not the wealthier countries that policymakers and development agencies have in mind when recommending remittances as a remedy for creating economic growth.
At first glance, it seems plausible to assume that money sent by migrants from abroad brings wealth to the national economy just as foreign investments do. But unlike the latter, which is money invested by transnational companies or international organizations, the former are the earnings of migrants who have left the country to work and save money elsewhere. Although their remittances enrich their home country, they also represent a drain of human resources. Such a loss of labor is particularly salient in small countries like Haiti, the Kyrgyz Republic, Lesotho, Moldova, Nepal, Samoa, or Tajikistan. These countries are the most remittance- dependent countries in the world, where remittances constitute 20 to 48 percent of gross domestic product (GDP; see chapter 2) and where economic growth relies almost entirely on the continuous migration of a significant segment of the population (Pickert and Feilding 2006). Migrant remittances have also become a critical asset in the economy of countries with larger populations such as the Philippines, which encourages its citizens to take work in the global domestic service industries abroad (ERCOF 2010, xvi; see also chapter 6).
In many developing countries, however, the contribution of remittances to the national economy is less significant. Thus in Colombia, Ecuador, Mexico, and Peru migrants constitute 7 to 10 percent of the population, but because of these countries' size and relatively developed economies, remittances make up only a small percentage of their GDP (World Bank 2013b). It is the migration and the remittance economy of countries such as these and the effect that this economy has on the life of migrants and their families that are the topics of this book. Peru in particular offers an intriguing case study because the country's experience sheds light on some of the most contested issues in current debates on migrant remittances: their impact on inequality. Recent studies show that, compared to those in the rest of Latin America, Peru's remittances are extremely unequally distributed among the population owing to the diversity and dispersal of its migration (Fajnzylber and López 2007, 6; Acosta et al. 2006, 965). Unlike the migrations that are usually cited in the scholarly literature as examples of remittance economies (such as Egypt, Mexico, and Morocco), which are propelled by labor migrants from mainly poor rural and urban areas, Peruvian migrants come from a variety of social strata and regional groups. As a result, remittances are a critical source of income in the household economies not only of working- class families but also of middle- class families and make an important contribution to both the rural and the urban development of the country. Rather than reducing existing inequalities in Peruvian society, remittances amplify them and, even more relevant, create discord between migrants and nonmigrants and between migrant households and nonmigrant households.
Excerpted from Return to Sender by Karsten Paerregaard. Copyright © 2014 Karsten Paerregaard. Excerpted by permission of Woodrow Wilson Center Press.
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