The World in Canada Part 4
by Alidad Mafinezam
It is by now established among academics and bureaucrats in international organizations alike that remittances—the funds sent by residents in industrial countries to their places of origin— constitute a major source of income for the developing world. While reliable statistics on exactly how much is sent from the developed to the developing world are hard to find, and do not exist at all for some sending and receiving countries, the potential of remittances to alleviate some of the pains of global poverty is no longer in dispute. According to Michele Wucker of the World Policy Institute in New York, in 2003 alone some us$100 billion was sent to the developing world in global remittances, which is almost twice the total amount of development aid spent by all donor governments in that year. Remittances, Wucker claims, account for more than 10 percent of the gross domestic products of six Latin American nations. Among the poorer countries on the continent, the figures are even higher, reaching 29 percent in Nicaragua. In the cases of Haiti and Jamaica, remittances bring in more revenue than does foreign trade. Mexicans in the U.S. wire home us$14 billion a year, which, after oil exports, makes up Mexico’s largest source of foreign currency. India, another major recipient of remittances, takes in more than $10 billion in this fashion.
The fact that our ministry of finance does not yet possess reliable statistics on how much Canada sends to the developing world in the form of remittances indicates how underdeveloped this policy area is in this country. Nevertheless, various estimates put the number in the range of ca$2 to $4 billion per year. The Canadian International Development Agency has launched a program to support community research focused on the channels used and amounts remitted to Caribbean countries from Canada. It has also funded non-governmental organizations to explore the impact of Canadian diasporas in enhancing the development prospects of Latin America. Such interest in the role of remittances in alleviating poverty in the developing world is especially significant vis-àvis India, given the country’s growing global role and the high number of East Indians now living in Canada—700,000 and growing. In a partnership with the State Bank of India, which was signed last November, the two governments aim to extend remittance services and expand the available products that connect the two countries in this area, focusing on reducing the transaction costs of remittances, which now vary between 10 and 17 percent. The press release issued by the Department of Finance included the following statement:
“Remittance flows are an essential and growing source of income and capital for many developing countries, so this partnership will have a lasting impact for families with ties and savings in both Canada and India,” said Minister [Ralph] Goodale.“It will ultimately lead to more affordable, convenient and secure options for transferring money between individuals in our two countries, and for providing the investment needed for families to fund education, housing and small business start-ups.”
To harness the potential of remittances more fully, however, developing countries must find ways to capture the skills and resources of their more educated and prosperous émigrés, such that brain drain can be turned into brain circulation. A good example of this, cited by Wucker, is provided in a study conducted by the Public Policy Institute of California: of the 2,300 foreign-born engineers in Silicon Valley, the study found that half travelled to their countries of origin at least once a year, and a similar number were found to have been involved in launching start-up companies in their countries of origin. This type of high-end association will noticeably improve the economic prospects of developing countries. “Beyond Remittances: The July/August 2005 5 Role of Diaspora in Poverty Reduction in Their Countries of Origin,” a study funded by the British Department for International Development and conducted by the Migration Policy Institute in Washington DC, outlined the various policies on their diasporas that have recently been instituted by the governments of China, India, the Philippines and others.
Canada is well positioned to commission Canadian experts to undertake similar studies.
Such ideas have also been reflected in the work of Jagdish Bhagwati, a leading economist of international trade at Columbia University. In an essay that appeared in Foreign Affairs in 2003, he advocated an approach to immigration in receiving countries that is based on the recognition that the flow of people into the U.S. and other wealthy countries simply cannot be stopped. Once this fact is acknowledged, he wrote, work can begin on managing immigration for the benefit of both receiving and sending countries. His website at Columbia states that his proposal in the 1970s that sending countries should tax their skilled émigrés represented a novel approach at that time, and that the concept of the so-called Bhagwati tax has now been revived by experts in international development.
Bhagwati advises sending countries to abandon the brain drain model of trying to keep their highly skilled labour force at home, and to adopt a diaspora model instead. “The diaspora model is superior from a human rights viewpoint,” he says, “because it builds on the right to emigrate, rather than trying to restrict it.” Bhagwati claims that the potential of such an approach to generate revenue for developing countries is indeed vast. The combined income of Indian-born U.S. residents amounts to 10 percent of India’s GDP, he says, even though these residents make up a mere 0.1 percent of the U.S. population. It is indeed time for a similar perspective to be applied to Canada, covering numerous countries with sizeable émigré populations in this country, especially those that play key roles in the international arena.
Such an approach is especially significant in regard to the expatriate Chinese, whose global number has reached over 35 million. Together, these members of the Chinese diaspora earn hundreds of billions of dollars a year and are the ideal conduits for the economic development of China, especially those rural areas still untouched by the country’s urban-based economic boom. This point is well made in an article by Paul Dillon and Estanislao Oziewicz on the role of the Chinese diaspora in a special feature on “China Rising” in The Globe and Mail last October, in which University of Saskatchewan sociologist Zong Li is quoted as saying that “the Chinese government sees the overseas Chinese as a very important force … Their strategy is that even if you physically move out of China, you can still make a contribution to China through business and investments, and culture.” University of Hyderabad sociologist Sadananda Sahoo has advised Indians to learn from the Chinese example since Chinese expatriates are now responsible for more than half of all foreign investment in China, investing some us$20 billion in their first homeland per year. Since there are more than a million people of Chinese descent in Canada, and since Canada receives some 40,000 new immigrants from China every year, it is essential to examine and harness not just the economic, but also the cultural and political interaction of Chinese Canadians with China.