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The impact of international remittances on local living standards: Evidence for households in Ghana

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... increase of almost 2 billion from 2006 (Quartey 2009). These numbers do not account for unofficial remittances, which are difficult to calculate, but are thought to account for as much as 65% of total remittances (Higazi 2005, Mazzucato, van den Boom andNsowah-Nuamah 2004). Much like many other migrant communities in Africa, Ghanaian migrants utilise the official banking system and transfer agencies, but also courier and cash-in-hand systems (Higazi 2005, Stocchiero 2008) that often offer reliable, cheaper and faster services. ...
... As a result difficulties abound in the recording of international remittance transfers. In 2002, conservative estimates put remittances at 8 percent of Ghana's GDP (Mazzucato et al. 2004). ...
... According to the Ghana Living Standards Survey (GLSS) and data from the Ghana Transnational Networks research programme, between 16 and 28 percent of remittances are sent by migrants to finance the construction of houses 34 and businesses, while about 11 percent is sent to pay for ceremonies such as funerals 35 and for collective development projects (Mazzucato et al. 2004). Data from this study indicated that there is a significant correlation between remittances and living standards (Mazzucato et al. 2004). ...
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Origin countries' governments are increasingly adopting policies to attract the resources of their migrants and their communities to stimulate development. These policies, sometimes referred to as 'diaspora engagement policies', range from securing the rights and protection of migrants while they are abroad, to strengthening the migrants' sense of national identity and their linkages to the origin country and promoting remittances, financial investments and contributions to development. This study examines migrant communities and organisations from three countries - Ghana, India and Serbia - and explores how the governments of these countries have perceived 'their' respective migrants and, more specifically, the way in which these governments have attempted to engage migrants and their organisations in the interest of national development. The strategies adopted demonstrate various levels of commitment to policies for migrants. At times governments accommodate the needs of migrants into existing policies; other times they design new policies to support the specific needs of migrant communities and some other times they decide not to introduce any national policy to engage the diasporas. In fact, recognizing the value of migrants does not necessarily translate into concrete policies that welcome them to take part in national development. The present study focuses specifically on how origin country governments have formulated and implemented four specific policies: I Facilitation of remittance transfers and finance investments. Several countries have introduced policies to encourage official remittances including increasing the competition among money transfer services leading to reduced transfer fees, expanding the banking and transfer service networks to reach remote areas, and introducing remittance receivers to banking services and savings schemes. In some cases these changes have occurred thanks to financial reforms introduced by governments to open the market to competition and liberalise the foreign exchange. Many obstacles still exist to channel remittances from informal to formal services, not the least the persistent lack of trust of some migrants towards their government and, more generally, the fact that transferring money formally often provides more advantages to the government and service agencies than to the migrants. II Promotion of migrants' investment in small-to-medium size enterprises (SMEs) in the origin countries. SMEs represent an exciting potential both for migrants and their origin countries. Most countries, including Ghana, India and Serbia, are willing to dedicate resources to either create institutions to support migrants' enterprises or to promote public events to encourage the diasporas to become part of a transnational network of entrepreneurs. However, the general investment climate in the origin countries continues to be the principal concern of migrants interested in SME development and overall most of the entrepreneurial activities supported by migrants in origin countries are still the result of autonomous activities of individual migrants rather than specific investment programmes. III Encouraging the transfer and circulation of skills. The government of India has created a systematic method to attract the skills and the human capital of its diaspora for the development of various sectors of the Indian economy. Ghana's main concern remains the health sector and it is acting to prevent the departure of its health professionals as well as on attracting Ghanaians abroad to provide temporary service in the national health system. Serbia's interest in this area has not yet been matched by actual policies. The future outcomes of the policies enacted by India are awaited as they will provide valuable lessons for other countries. IV Implementation of collective development projects initiated by migrant organisations. Migrants' potential for development has always been present and migrants have participated in development activities independently or as part of migrant associations for decades. By and large, collective development projects continue to be designed and implemented by migrants and their associations without the intervention of international development agencies or governmental bodies. In the Serbian case, the diaspora has requested the government to provide greater guidance to migrant 4 associations so that they can direct their resources to areas of need. India has recently established an institution to provide such guidance. The case of Ghana offers an alternative view as migrant associations are reluctant to participate in large projects where they do not know personally local actors, particularly if government agencies are involved. As a result, the Ghanaian government's strategy so far has been to showcase the achievements of migrant organisations' projects rather than to intervene. The study also identifies certain aspects that seem to affect the way in which origin country governments respond to their diasporas:  Government's perceptions of its own migrants shape the manner in which migrants are described in public discourse, whether they are seen as a positive or negative force and, as a consequence, whether they are included or excluded from national policy. A country's migration history and trends greatly influence these perceptions and will shape the strategy adopted by a government towards its migrant communities.  The historical relations between a government and its migrants and their communities abroad greatly determine the policy approach taken by a government. Migrant communities that have historically been suspicious of the government's intentions will require much more reassurance from the state that its activities are promoted in the genuine interest of migrants. Establishing positive linkages will be much less difficult for governments that have maintained contact with their migrant communities over time.  The contributions that migrants can make to development may appear to easily fit into a country's national interests. However, it can be difficult for a government to include migrants in its national development plan as migrants add an extra set of interest to existing arrangements. Origin country governments also have the delicate task to find a good balance between the rights provided to migrants and nonmigrants.  Even when a government sees value in engaging its diasporas and believes that a long-term collaboration with migrants could lead to development, it might not have the necessary resources or the institutional capacity to design, implement and evaluate diaspora engagement policies. These policies in fact require the participation of various government departments, which must reach agreement to design cohesive policies and coordinate their implementation. Such availability of time and resources might not always be available in countries where there are more pressing national priorities.  A country's level of development and, even more importantly, a government's commitment to improvement through economic, financial, and social reforms seem to have a strong effect on the outcomes of diaspora engagement policies. Persistent low transparency and accountability, extensive bureaucratic processes and high levels of corruption reduce migrants' interest in becoming involved in development. In some countries, migrants' lack of trust in the government will discourage them from becoming involved in development, particularly when migration and development initiatives involve government agencies.  Pressure from governments and international agencies might push origin countries that are not interested or ready to engage migrants to commit to diaspora engagement policies. These activities seldom turn into action or last beyond the initial period of funding. Government policies to support migrants' involvement in development, as much as migration and development initiatives promoted by international development agencies, must be designed with a clear understanding of the characteristics of the migrants they are meant to support, of the historical relations that exist between the government and its migrants, and the interests and the objectives of the diasporas. Migrants should be given the opportunity to negotiate their own role in national development and to influence development policies. In the end, to be appealing, policies to engage migrants should provide added value not only for the government and its specific projects, but also for migrants who often go beyond their personal call of duty to lend a hand in the development of their origin country.
... Remittances have an impact on the Ghanaian economy through investment in housing, which has spinoff effects on a large number of businesses (Mazzucato, van den Boom, and Nsowah-Nuamah 2004). The GLSS 3 and 4 also reported that remittances significantly improved household welfare. 2 The bulk of remittances, however, are reserved for private consumption and recurrent expenditures, including living expenses, school fees, hospital bills, weddings and other social activities, funerals, repayment of debt, and the costs of migrating abroad. ...
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The study examines remittance service providers, their sources including informal remittances, cost and channels using survey data collected in Accra.
... These figures underestimate the full extent of remittances, as much of what comes from migrants is brought through the hands of travellers and goes unregistered. Mazzucato et al. (2005) estimate that unregistered remittances coming into Ghana can amount to two-thirds of total remittances sent. This estimate concurs with worldwide estimates by Choucri (1986) and Russell (1986). ...
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A transnational perspective is used in the analysis of the lives of Ghanaian migrants based in the Netherlands to answer two questions: how do migrants contribute to their home country, and do they also participate in the economy where they reside? An analysis of spending patterns of migrants both in the Netherlands and in Ghana shows that migrants are doubly engaged. In Ghana they invest in housing, business and education, contributing to the daily expenses of people back home and investing in their and their extended family's reputation by donating generously at funerals. At the same time they participate in the Dutch economy at the neighbourhood, city and national level. They devise various strategies for juggling their objectives between these two countries. However, Ghanaian migrants' contribution to both countries is hampered by the high costs of identity documents both in the formal and informal economy. The paper thus links Dutch migration policies with the consequences for the lives of people back in Ghana. As such, it demonstrates the relationship between two areas that are usually kept separate in both academic and policy discourses: development in the Third World and the integration of migrants in industrialised countries.
... In Sudan, for example, informal remittances are estimated to account for 85 percent of total remittance receipts. Preliminary findings from Mazzucato et al. (2004) of the Ghana Transnational Networks research program in Amsterdam find that as much as 65 percent of total remittances to Ghana may be sent informally and the Bank of Ghana estimates that informal flows are at least as high as recorded flows. In South Africa, an informal money remittance system exists side-by-side with the formal system, and the bulk of remittances to neighboring countries flows through informal, rather than formal channels (Bester et al., 2004). ...
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A considerable amount of research has been conducted on the topic of migration and remittances over the last few years. Early studies on immigration policy assumed that migrants leave their countries, settle in a new country, start integrating in their new society, and abandon their ties with their country of origin. Today, however, globalization makes it possible for immigrants to remain connected with their native countries while residing abroad. To address the latest developments on migration and remittances, the authors provide a global survey of the analytical and empirical literature on these issues. This paper reviews evidence on how migrants contribute to the economic development of their countries of origin. In addition to describing the state of knowledge regarding flows of people and migrant remittances worldwide, it focuses on the current literature dealing with the development impact of transfers of money, knowledge, and skills by migrants back to their home countries. The paper also examines the complex question of the impact of highly skilled migration on labor sending countries. There is a continuing debate over what role migration should play in the mix of policies available in order to promote economic development. Although mechanisms for liberalizing goods, services and capital markets are in place, the international mobility of labor still faces stringent restrictions. The paper, therefore, reviews proposed mechanisms to strengthen the governance of international migration, including policy options to make migration management bilateral, regional, or global. It also considers the relationship between international trade and development policies and migration policies, including how to tap to the diaspora. Copyright 2006, Oxford University Press.
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At the Central Market in Kumasi in Ghana I befriended two women, Auntie Emi and Sister Afia, both in their mid-thirties and living apart from their husbands who were in the United States. Auntie’s husband had left her soon after they got married and the birth of their now ten-year-old son. In the first two years, he sent money but then stopped doing so and she had heard nothing for five years. The two women expressed their longing for a new husband and a second child but were faced with the situation that, as married women, they could not go out in the evening for a beer without becoming the target of gossip.
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