Dynamics of global asymmetries: how migrant remittances (re-)shape North–South relations

Abstract

This article analyses North–South relations through the lens of migrant remittances. Scrutinising remittances, this article argues that remittances need to be understood as a moral claim on the migrant’s propensity to remit. Migrants and their remittance-receiving families are bound together in translocal moral economies. These relations are described as a form of negotiated dependency. Due to the logic of remittances, net remittance-receiving economies within the Global South increasingly merge with the Global North. However, this process is conflict-ridden and (re)shapes and (re)produces global asymmetries, with remittances contributing to the individualisation of development. This emerging scenario is characterised by a fundamental micro–macro dilemma: On the micro level, migrants provide for the well-being of their relatives. On the macro level, migrant remittances increase in ‘value’ as currency hierarchies are deepened. In this scenario, protectionist labour market policies that are intended to reduce levels of migration within the Global North are likely to incentivise migration and thus reproduce the asymmetrical nature of North–South relations.

Keywords:

• Remittances
• migration
• exchange rates
• negotiated dependency
• North–South relations
• currency hierarchies

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1 Korzeniewicz and Moran, Unveiling Inequality; Milanović, Global Inequality.

2 Thirlwall, Economic Growth in an Open Developing Economy, 3.

3 Korzeniewicz and Moran, Unveiling Inequality, xv.

4 Thompson and Reuveny, Limits to Globalization.

5 For an overview, see Vernengo, “Technology, Finance, and Dependency.”

6 Warnecke-Berger, “Rent, Capitalism and the Challenges”; Elsenhans, Saving Capitalism from the Capitalists.

7 Palludeto and Abouchedid, “Currency Hierarchy in Center–Periphery Relationships”; Fritz, de Paula, and Magalhães Prates, “Global Currency Hierarchy”; Keynes, Treatise on Money.

8 It is this context in which the concept of the Global South has its strength as the concept emphasises a shared history of colonialism and underdevelopment; see Braveboy-Wagner, Institutions of the Global South.

9 Slater, Geopolitics and the Post-Colonial. Brandt, North–South. A Programme for Survival.

10 Dargin, Rise of the Global South.

11 Hameiri, Jones and Heathershaw, “Reframing the Rising Powers Debate”; Cammack, “G20, the Crisis, and the Rise.”

12 Prashad, Poorer Nations.

13 Remittances do not invariably need to be monetary transfers. For instance, Levitt, “Social Remittances,” argues for a broader understanding than monetary transfers, such as transfers in kind and immaterial transfers, such as culture and ideas. In order to accentuate the politico-economic effects of remittances and their embeddedness in the structure of North–South relations, however, this article focuses on financial remittances.

14 World Bank, World Bank Development Indicators.

15 The immense growth of world financial markets and the reduction of transaction costs smoothed the way for these new economic flows such as remittances or financial rents on international financial markets. Beginning in 2007, the world financial crisis showed that wealth out of finance had outgrown the gains from the ‘real economy’. Helleiner, “Understanding the 2007–2008 Global Financial Crisis.” In the decades before the crisis, new players had entered world financial markets, such as sovereign wealth funds or private equity funds. Ramamurti, “Impact of the Crisis on New FDI Players.” Currently, sovereign wealth funds have invested around US$5 trillion. A great part of this money comes from oil exporting countries and securitises and transfers oil rents into global finance. At the same time, financial markets benefited and curiously still benefit from both the financialisation of household debt, particularly in Anglophone countries, and the financialisation of poverty through microcredits in the Global South. Hein et al., Finance-Led Capitalism?; Mader, Political Economy of Microfinance.

16 Dicken, Global Shift, 20; Following the latest available United Nations Commission on Trade and Development (UNCTAD) statistics, world trade in goods and services accounted for US$20.6 trillion in 2016, two-thirds of which were traded within transnational corporations. FDI are exclusively concentrated on a small group of countries, mainly within the developed world.

17 Bakker, Migrating into Financial Markets.

18 Indeed, and although highly disputed, some empirical studies have pointed to the potential effects of remittances for lowering poverty as well as increasing local employment. For an overview, see eg Rapoport and Docquier, “Economics of Migrants’ Transfers”; However, other studies show that with increasing remittances inflows, labour market attendance declines in line with increasing reservation wages: Combes et al., “Remittances and Working Poverty”; Acosta, Labor Supply, School Attendance, and Remittances.

19 Kapur, Remittances: The New Development Mantra?; for an overview on this discussion, see eg de Haas, “Migration and Development Pendulum.”

20 Binford, “Migrant Remittances and (Under)Development in Mexico.”

21 Thompson and Reuveny, Limits to Globalization; Dickinson, Globalization and Migration. Today, 40% of migration flows are directed towards the Global North, 40% is South–South migration and the remaining 20% is within the Global North. Taking migrant stock as a measurement, this picture even intensifies: in 1995, about 53% of global migrant stock resided in the Global North, in 2015, this number increased to 66%; see OECD, Perspectives on Global Development 2017.

22 Czaika and de Haas, “Globalization of Migration,” 283.

23 OECD, Perspectives on Global Development 2017, 87.

24 Korzeniewicz and Albrecht, “Income Differentials and Global Migration.”

25 For an empirical overview on the currency distribution at an international level, see Fritz, de Paula, and Magalhães Prates, “Global Currency Hierarchy,” 211.

26 World Bank, Migration and Remittances Factbook 2016.

27 World Bank, Migration and Remittances: Recent Developments and Outlook.

28 World Bank, World Development Indicators.

29 Warnecke-Berger, “Salvadoran Transnational Transgressions”. In the case of El Salvador, for example, almost a fourth of the population lives in the US and produces an output three times higher than the entire GDP of El Salvador. Hinojosa-Ojeda, Empoderamiento Transnacional Salvadoreño.

30 Warnecke-Berger, “Remittances, the Rescaling of Social Conflicts”; Amuedo-Dorantes and Pozo, “Remittance Income Volatility and Labor Supply”; Paerregaard, Return to Sender.

31 Acosta, Labor Supply, School Attendance, and Remittances; Cox-Edwards and Rodríguez-Oreggia, “Remittances and Labor Force Participation”; Amuedo-Dorantes and Pozo, “Migration, Remittances, and Male and Female Employment Patterns”; Jackman, “Note on the Labor Market Effects of Remittances.”

32 Warnecke-Berger, “Remittances, the Rescaling of Social Conflicts”; Paerregaard, Return to Sender.

33 World Bank, Remittance Prices Worldwide Quarterly.

34 Laferrère and Wolff, “Microeconomic Models of Family Transfers.”

35 For example, the new economics of labour migration: Stark and Bloom, “New Economics of Labor Migration”; Stark and Lucas, “Migration, Remittances, and the Family.”

36 Paerregaard, “Resilience of Migrant Money”; Åkesson, “Remittances and Relationships”; McKenzie and Menjívar, “Meanings of Migration, Remittances and Gifts”; Singh, “Daughter-in-Law Questions Remittances.”

37 Bryceson and Vuorela, “Transnational Families in the Twenty-First Century.”

38 Lindley, “The Early-Morning Phonecall.”

39 See on the concept Booth, “On the Idea of the Moral Economy.”

40 Warnecke-Berger, Politics and Violence in Central America and the Caribbean.

41 Singh, “Daughter-in-Law Questions Remittances.”

42 Horst, “Blessings and Burdens of Communication”; Drotbohm, “Gossip and Social Control across the Seas”; Åkesson, “Remittances and Inequality in Cape Verde.”

43 Bernhard, Landolt and Goldring, “Transnationalizing Families.”

44 McKenzie and Menjívar, “The Meanings of Migration, Remittances and Gifts.”

45 Baldassar, Baldock and Wilding, Families Caring across Borders; Baldassar, “Transnational Families and the Provision of Moral and Emotional Support”; Paerregaard, Return to Sender.

46 Warnecke-Berger, “Spatial Turn and Economics.”

47 Hunter, “Empowering or Impeding Return Migration?”; Horst, “Blessings and Burdens of Communication.”

48 Leyshon and Thrift, Money/Space, 21; Simmel, “Philosophie des Geldes,” 663.

49 Warnecke-Berger, “The Spatial Turn and Economics.”

50 Waldinger, “Between ‘Here’ and ‘There’”; Schunck, “Immigrant Integration, Transnational Activities.”

51 See Warnecke-Berger, Transnational Economic Spaces, Moral Economy.

52 Ketkar and Ratha, “Diaspora Bonds for Funding Education.”

53 World Bank, Migration and Remittances Factbook 2016, iv.

54 Waldinger, Popkin and Magana, “Conflict and Contestation in the Cross-Border Community”; on development NGOs, see Elsenhans and Warnecke-Berger, “Non-Governmental Development Organizations.”

55 Usually, HTAs spend more on building schools and providing education, on water supply and on infrastructure and less on direct employment opportunities. Beauchemin and Schoumaker, “Are Migrant Associations Actors in Local Development?”; Chauvet et al., “Migrants’ Home Town Associations and Local Development”; Licuanan, Mahmoud and Steinmayr, “Drivers of Diaspora Donations for Development.” However, flagship initiatives, such as Mexico’s tres-por-uno programme, were soon suspected of political corruption and clientelism. Seffer, Regime-Hybridity in Mexico.

56 Bhagwati and Wilson, Income Taxation and International Mobility.

57 Anzoategui, Demirgüç-Kunt, and Martínez Pería, “Remittances and Financial Inclusion”; Orozco, Migrant Remittances and Development in the Global Economy; Mader, Political Economy of Microfinance.

58 Cross, “Finance, Development, and Remittances”; Hudson, “Developing Geographies of Financialisation.”

59 Bakker, Migrating into Financial Markets; Faist, “Migrants as Transnational Development Agents.”

60 Yang, “International Migration, Remittances and Household Investment,” 621. In the long run, remittances are likely to appreciate the receiving economy’s currency, causing Dutch disease as the exchange rate is determined by fundamentals (but only in the long run). In the short run, however, currency exchange rates are determined by speculation. See Kaltenbrunner, “A post Keynesian Framework of Exchange Rate Determination.”

61 Faini, “Workers Remittances and the Real Exchange Rate.” Large-n studies come to the same conclusion: Bleaney and Tian, How Do International Remittances Respond.

62 Lueth and Ruiz-Arranz, Are Workers’ Remittances a Hedge, 12.

63 Singer, “Migrant Remittances and Exchange Rate Regimes,” 307.

64 Faist, “Migrants as Transnational Development Agents.”

65 Kapur, Remittances: The New Development Mantra?

Additional information

Notes on contributors

Hannes Warnecke-Berger

Hannes Warnecke-Berger is Senior Researcher in the Department of International and Inter-Societal Relations at University of Kassel, Germany. He is Chairperson of the section on development theory and development policy of the German Association of Political Science. His theoretical research interests are in international and global political economy, peace and conflict, migration, development and North–South relations. Empirically, he has experience in Latin America, Southeast Asia, West Africa and Europe.