The effect of remmittances

The Effects of Remittances in Developing Countries
Barbara E. Cervantes Horta

Basic Research Paper prepared for the Law Faculty of The Hague University
The Hague, September 18, 2010
Table of contents

Table of Contents..................................................................................................... 2
Schema of the proposedanalysis.............................................................................. 3
Introduction.............................................................................................................. 4
Research Content................................................................................................. 5 - 7Conclusion................................................................................................................ 7
Bibliography ............................................................................................................8

Schema of the proposed analysis



Introduction
On the last years the world economy has been experiencing a constant shift on its modus operandi. The economical boost that came mainly from Foreign DirectInvestment (FDI) into developing countries has been decreasing and its seems to be rapidly replaced by the increasing flow of remittances worldwide.
There is an estimate that 239.7 billion dollars entered developing countries from migrant transfers in 2008. However, this data comes from recoded sources which in practice are not the principal way of transferring money, in fact most of the remittanceswhich enter the majority of countries pass through informal channels.
The critical migrational situation with which we are faced today only highlights the importance of remittances and the need to regulate them. There are several issues that come along with the remittance dilemma: economic and social issues, development, employment and migration regulation, all suffer from the effects ofremittances.
The paper will aim to provide in Part 1 a judicious overview of the current situation of remittances in developing nations and what kind of factors have influenced its development. Following in Part 2 it will discuss the effects of such remittances in developing countries and the discussion and comparison of two scenarios, finally the conclusion will include the opinion of the authorResearch Content
Part A
This part will cover the fact that in order to understand the existence of remittances, it is necessary to understand the migratory situation of a country. The level of migration in a country has a direct impact in the remittances flow of the same and therefore the causes and influential factors for migration are to be taken into account while discussing this subject.
Thereasons for migrating are different from one developing country to another and that is why, while we can make some general observations, the specific situation of each state must be studied separately. For example, The Philippines is a country that has a high migration rate of workers with different skill levels , from high skilled like doctors to lower skilled workers like house keepers. In oneof her articles, Maruja M.B. Asis maintains that in the last 30 years the Filipino population has developed a "culture of migration" in which people is willing to work despite of the costs and risks of migrating. She also explains that the mass labor migration started as a response of the economic crisis of the 70's when the job provision wasn't enough and that the government envisaged workersmigration as a temporal phenomena. However, the opening of new markets in Asia and Europe has even furthered migration in this country.
In the case of Latin America we can differentiate two different scenarios, the first one being Mexico and Central America where most of the migrants present a low level of education and/or skills and are generally on the last stages of income distribution in...