Workers’ remittances—-bigger than aid flows

Time to buy West­ern Union (NYSE: FDC). The World Bank’s Glob­al Eco­nom­ic Prospects for 2006 has just appeared (a 2.8mb pdf file, but ‘lighter’ ver­sions are avail­able here). It ana­lyzes the huge flows of worker’s remit­tances, show­ing that even the record­ed flows to devel­op­ing coun­tries are big­ger than the devel­op­ment assis­tance bud­gets of devel­oped coun­tries. But, for WTO, migra­tion may be the next ‘agri­cul­ture’.

Inter­na­tion­al remit­tance flows to devel­op­ing coun­tries are expect­ed to rise to $167bn (€143bn, £97bn) this year, twice the amount of offi­cial aid paid by gov­ern­ments, the bank said in its Glob­al Devel­op­ment Prospects report.

Unre­port­ed flows mean that remit­tances are prob­a­bly 50 per cent greater than the record­ed num­ber, at a con­ser­v­a­tive guess, the bank said. Up to 45 per cent of total remit­tances are paid by migrant work­ers in oth­er poor coun­tries, it said.”(Finan­cial Times)

In the terms of the WTO’s Gen­er­al Agree­ment on Trade in Ser­vices, the tem­po­rary move­ment of workers—such as con­struc­tion work­ers or nurs­es or ships-hands—from one cus­toms ter­ri­to­ry to anoth­er is known as the ‘fourth mode’ of ser­vices deliv­ery. But it’s been one of the hard­est issues to deal with in WTO; in part because many devel­op­ing coun­tries are just as obsti­nate­ly opposed to lib­er­al­iz­ing this vital trade as the devel­oped coun­tries.

Here’s just a taste from the Overview of the report that indi­cates the fas­ci­na­tion and the dif­fi­cul­ty of this huge, but so-far large­ly under­ground issue for the mul­ti­lat­er­al trad­ing sys­tem:

Over the past two decades, bar­ri­ers to cross-bor­der trade and finan­cial trans­ac­tions have fall­en sig­nif­i­cant­ly, while bar­ri­ers to the cross-bor­der move­ment of peo­ple remain high. Despite its eco­nom­ic ben­e­fits, migra­tion remains con­tro­ver­sial and, for some peo­ple, threat­en­ing. In part, this is because migra­tion, like trade and cap­i­tal move­ments, has dis­trib- ution­al con­se­quences, where­by net gains for soci­ety may mask impor­tant loss­es for some indi­vid­u­als and groups. But migra­tion also sparks resis­tance because the move­ment of peo­ple has eco­nom­ic, psy­cho­log­i­cal, social, and polit­i­cal impli­ca­tions that the move­ment of goods or mon­ey do not.” Glob­al Eco­nom­ic Prospects, 2006

If, as I still expect, the Doha round begins final­ly to dis­man­tle the absurd, his­tor­i­cal pro­tec­tion of indus­tri­al coun­try agri­cul­ture, migra­tion may be the next major chal­lenge for the mul­ti­lat­er­al trad­ing sys­tem.

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