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LOOKING AHEAD
01.05.2009

April 21, 2009 (the date of publication in Russian)

Konstantin Dymov (Lviv, Ukraine)

MIGRATION AND MONEY FLOW: UKRAINE SLIDING DOWN TO THIRD WORLD STATUS

8% of Ukrainian GDP is made up by remittances of its migrant workers

The deepening of the abyss separating "the golden billion" from the rest of people logically leads to the increase in the number of migrants. This process has especially intensified in the end of the former and the beginning of the present century, during the epoch of so-called globalization, which is now turning into another great "Migration period". Huge amounts of destitute people having no hope to get a worthy life in their motherlands leave their old haunts for the "blessed" West in search of better life. Technical achievements of modern civilization (like the development of transport and electronic communication) stimulate people's migrations, as well as western mass media does, spreading myths of "heavenly life" in "western democracies". As Lester Thurow wrote in his book titled "The Future of Capitalism": "… for the first time in human history communications and computer technologies have created a world where people from the most primitive villages regularly see the level of life in the richest countries of the world on their TV sets. The level of life of average family on TV is mostly much higher than the level of life of real average American family, but people who watch TV think that's how ordinary Americans live. Living in poverty and seeing these rich people on TV a poor villager feels an unbearable yearning to leave for better!" [reverse translation from the Russian edition – RPMonitor]

Migration of the poor to developed countries is some kind of "the reverse of the coin" of capitalist globalization, realized in the interests of western multinational corporations' enrichment, but at the same time gradually undermining welfare of the very "developed democracies". The stream of surplus value from exploited countries to "rentier-countries" is closely related to the migrants' stream, directed the same way; these two streams seem to cause one another mutually and correlate between each other. Labor migrants ("guest workers", Gastarbeiters) move to places, which are filled by surplus product, created by them, but appropriated by western capitalists so migrants try to get the product "back".

But anyway in the end of 1990s the number of people who had left their motherlands for other countries was about 50-130 millions (various scientists give different information). We can have no doubt that during the last decade the number of these people increased substantially. Crises and other disorders only strengthened the migration process. When the present crisis began, many observers (and I was among them) gave an erroneous prediction that the crisis will force many Ukrainians who work abroad come back to their homeland. But no such luck! This has not happened. Quite the contrary! And now the increase in the "outflow" of Ukrainian migrants seems to be regulated mostly by administrative limits, imposed by some countries (e.g. the Czech Republic). It turned out that tortures of crisis in Russia and Europe are incomparable to tortures of crisis in "the independent and sovereign Ukraine"; getting a job abroad became easier than at home, so people try to "survive" the crisis outside the country. And many want to stay there forever

The increase in volumes of labor migration in the world reflects itself in vigorous growth of volumes of international money transfer. A bank term "remittance" is used to designate it. This word has Italian origin; initially it designated a pay document for international accounts and international money transfers in foreign currency (check, transfer note and etc.). But now it is more often used to describe money transfer itself. That's how the term "remittance company" appeared. It is used to designate companies specialized on the very international money transferring (e.g. Western Union).

A quick accumulation of remittance streams and, consequently, swift widening of business supporting it is one of the noteworthy modern trends. According to the most modest estimate of the World Bank Group, the volume of remittances in 2006 came up to $250-300 billion, and during the preceding decade the level of transfers had increased by 30% per year! (In particular, the 30%-growth, which exceeded all the conceivable rates of economic growth, was registered in 2006 in comparison to 2005). This business is one of the most fast-growing and perspective, and it definitely isn't threatened by any crises or shocks! As the number of work migrants is growing steadily, and the number of relatives, who stayed at home and live at the expense of guest workers' monetary support and need it more and more, is growing to the same extent. Of course, migrants' earnings diminish during crises, but in case of some difficulties any normal man would cut down his own expenses for the sake of provision of his wife and children.

$300 billion is a serious amount of money, but we must also take into consideration all the illegal transfers uncontrolled by statistics and taxation (which means more billions of dollars passing illegal and half-legal systems of "people's" money transfer). Some of these systems have centuries-old history. They are called "informal value transfer systems" (IVTS). They are represented by Arabian hawala (actually, a bank term "aval" originates from this word), Indian hundi, Chinese fei ch'ien and other. The most interesting thing is that these traditional money transfer systems, based on old technologies and the honesty of agents, are mostly faster and more reliable than ultra-modern computerized nets of "remittance companies" and at the same time charge less commission! It seems that diligence and honesty of primitive "medieval" bankers excel sophisticated "capitalist" electronics! To be honest, informal money transfer systems have one considerable defect they can be used by "informal sector" of economy or international terrorists. For that reason after September 11, 2001 terrorist acts the US started up a program of hawala liquidation. We can't but notice that there were no direct evidences of its participation in terrorist financing found, though. On the contrary, according to the investigation, murderers used quite legal bank institutions and channels

But let's "come back" to "official" and statistically accountable transfers. Mexico, which, according to some sources, has sent at least 12 millions of illegal emigrants to the USA, was a world biggest money transfer recipient till 2005. But then India occupied the first place in the list (obviously this happened due to well-paid programmers and scientists who work in Western countries). In 2006 the country received $24.5 billion, Mexico $24.2 billion, China $21 billion. The level of receipt reached $27 billion in India in 2007-2008; China rose to the second position with $24.5 billion; and Mexico didn't gain at all and went down to the third position (some say it's connected with the decline in the US construction sector, where many Mexicans work, and also with toughening of the US illegal immigration control). Such Asian countries as Philippines ($14.6 billion in 2006, $17 billion in 2007-2008), Pakistan and Bangladesh are also reckoned among large-scale recipients.

Latin American and Caribbean countries received $66.5 billion overall in 2007 (75% of it was received from the USA). Receipts from emigrants make up 10% of GDP in seven Latin American countries. According to the research held in 2004, 60% of adult "Latinos" living in the USA transfer money abroad. They send about 10% of their earnings to their native countries, and this money make up 50-80% of receivers' cash recourses. The biggest volumes of money transferred to Latin America come from six states: New York, California, Florida, Texas, Illinois and New Jersey.

We ought to single out Moldova from all CIS countries, as money transfers from abroad make up 25% of country's GDP! Citizens of Central Asian and trans-Caucasian republics also transfer a considerable amount of money to native countries.

Work migrants from Moldova, Uzbekistan, Tajikistan and other CIS countries mostly earn money "with the sweat of their brows" in Russia. But at the same time Russia itself gets a sizeable amount of remittances ($13.7 billion in 2006), but this money make up insignificant part of country's GDP and don't play appreciable part in its national economy.

And finally, Ukraine. The general number of migrant workers from the Ukraine amounts to 4,5 million (2 million work in Russia, half a million each in Italy, Poland and the USA, 250 thousand in Spain, 150 thousand in the Czech Republic and 75 thousand each in Greece and Portugal). These estimates are given by Ukrainian National Academy of Sciences Department of Ethnology. But I found another data in the Internet (I suppose, a greatly exaggerated one, though). According to it, only Ukrainian labor migrants in the EU delivered €27 billion to Ukraine and this is, according to Western statistics mentioned above, much more than the Indians, the Chinese and the Mexicans brought to their motherlands (!?). Ukrainian migrant workers' contribution to country's GDP is estimated at 8%. That way, the largest European country with huge natural and human resources, with rich culture and industrial traditions, substantially "keeps on" thanks to unqualified, dirty and "black" labor of its outcast citizens, who have to work for foreigners.

It's a shame, nothing but shame but we are already used to shame! Thanks to the ruling "elite", which governs Ukraine since 1991, citizens of the country are turned into powerless beggars, second- and third-rate people, and Ukraine itself has become hopeless, "dead" country, citizens of which gave up of the belief in future in native lands long ago, and are looking for happiness in other countries (or are going to do that). We can only dream about wonderful times when citizens of Ukraine will get as much money as they deserve for their work on factories and building areas, in their scientific institutes and engineering departments. But if we want this dream to come true, we firstly must dismiss parasitic, stupidly-thievish "national elite", which prevents the country form development.


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