A couple of weeks back at the International Forum on Remittances, a study was released which reported that global foreign remittances in 2006 totaled three times all aid provided by donor nations to developing countries (as reported by OECD). Global remittances totaled more than $300B while donor aid was $104B. Remittances even topped foreign direct investment in developing countries which totaled $167B (reported by the Institute of International Finance).

Remittances are the money transfers that foreign workers in developing countries send home to their family and relatives. Most of the transfers are between $100 and $300 at a time.

Remittances to India topped the list at $24.5B, followed by Mexico at $24.2B; China, $21B and the Philippines and Russia, $13.7B each.

And, guess what is growing the fastest? Your right, remittances!

This tells me that even if foreign does rise, it is likely to become an increasingly smaller contributor to capital transfer to developing countries and can never match the growing impact that migrant workers are having on the shifts in global capital.

How about we encourage easier, more secure and better priced options for people to send money back to their home countries? For many people, an ATM or Paypal or a mobile money transfer option would be a welcome solution.

I first read about this in the Philippine Daily Inquirer. Yes, I was in the Philippines last week ;-)

I continue to be very interested in better understanding whether the globalization movement is having a net positive or negative impact on our economically disadvantaged brothers and sisters. I have a growing reading list on poverty-related literature from a wide variety of viewpoints. Bhagwati in In Defense of Globalization (read my review) argues for the net positive conclusion while pointing out numerous negatives. Sachs in The End of Poverty (read my review) argues that without a financial aid “jumpstart”, globalization will continue to bypass many people.

One of the best articles that I seen written on the impact of globalization was published on the front page of the Wall Street Journal on May 24, 2007 entitled “Wealth of Nations: Globalization’s Gains Come With a Price“.

Here’s the summary … 100′s of millions of those living in extreme poverty have been lifted out of poverty in the last 25 years AND the wealthiest 10% of the world’s citizens have grown proportionately richer in that same time.

One of the most astonishing stats is that between 1981 and 2005, more than 450 million people in China (alone) stepped out of extreme poverty (based on UN’s definition of < $1/day using purchasing power parity methodology.) Since China has received very little international aid, this is almost all attributable to globalization. "From 2000 to 2005, per capita income of the bottom 10% of urban households in China rose 26% ... while those in the top [10%] saw gains of 133%.

The net is that on an absolute basis, globalization has had a truly phenomenally positive impact on reducing poverty (especially in the historical context). Yet on a relative basis the wealthiest people have increased their wealth faster.

The results in Latin America have been more mixed with positive results for the extreme poor in El Salvador, Chile, Ecuador and Costa Rica while negative in Mexico, Colombia and Peru [see chart at top.]

The article also tells the story of the impact of globalization of a family in Mexico which helps personalize globalization and explain some of the complexities as new emerging markets compete for the new global economic opportunities.

Please respond in comments to this article. Is this a fair/helpful/accurate report?

Tim Harford wrote an OpEd in today’s New York Times about the myriad of “self-imposed” export bureaucracy that most developing nations still have in place. The context and timing is related to this week’s Hong Kong WTO meetings where the rich nations are unwilling to move forward in reducing agricultural sudsidies which hurt exports of developing nations.

He explains that even if 100% of agricultural subsidies were eliminated, there would be still huge barriers for third world farmers to get their crops to export markets. In Central African Republic, it takes 116 days and 38 signatures for bananas to get to ships for export! On average, sub-Saharan Africa exporters face delays of nearly 50 days for each shipment and require some 20 signatures on at least 8 separate custom forms. (Source: Doing Business in 2006: Creating Jobs publication of the World Bank.) Can you think of a better situation for encouraging a culture of corruption?

An exporter in India requires 22 signatures on 10 documents placing India in the bottom 20 countries in the world for entrepreneurs wanting to export. Brazilian exporters require 39 days to get their produce onto a ship which means that some agricultural products are just not feasible to export.

In comparison, China can get exports moving in 20 days, the USA in 9 days and Denmark in 5 days.

Tim Harford is a columnist for The Financial Times and author of The Undercover Economist: Exposing Why the Rich Are Rich, the Poor Are Poor.

I attended the official launch event of the new partnership alliance between microfinance leaders Unitus and Accion in Bangalore this past Friday. This is a unique partnership of two experienced and innovative organizations who are turning their expertise and resources to bring massive acceleration of access to microfinance to India, a country with 1/3 of world’s poorest and to date significantly underserved with the empowering help of microfinance services.

The alliance has set an extremely ambitious goal of serving 15 million poor households in India by 2015 estimating to touch conservatively 75 million people (assuming 5 people per household.) This would represent a massive impact on global poverty in addition to being a transforming process for India.

Unitus will be focusing on “scaling up” innovative, early-stage/start-up Microfinance Institutions (MFIs) and Accion will be focusing on helping large, traditional banks in India “down-scale” to start providing relevant financial services to the poorest. Unitus has a good start with current partnerships with 5 very promising MFIs who are demonstrating significant progress already.

An overview of Microfinance