Transnational migration of people and capital

by Curran Cunningham

This first blog is intended to set the parameters for my forthcoming analysis of International Migration. As a keen reader on economic matters, my focus will be primarily on the impact of remittance flows on economic growth of both host and recipient countries.

My research kicks off with preliminary readings from Peggy Levitt and B. Nadya Jaworsky’s paper, ‘Transitional Migration Studies: Past Developments and Future Trends’. The paper’s focus is on three modes of transformation which migrants experience when they move to another country: socio-cultural, political and financial. I will concentrate on the financial aspect which looks into viewing transnational migration as a by-product and indeed victim of the later model of capitalism.

Transnationalism is the catalyst which is generating rapid globalisation. The increased interconnectivity between people and institutions has broken down the economic and social barriers that had once sheltered nation states. Multinational corporations are taking advantage of the opportunities of transnationalism to manufacture goods in a production line spanning the globe. Those processes oftentimes pass through a number of developing countries, with companies maintaining strict quality controls, minimising costs and thereby maximising profits. This can certainly have positive results for the countries concerned, helping generate employment and investment there.

A spin-off of this globalisation is the growth of migrants working abroad in industrialised and emerging markets, providing services locally at minimum wage costs, such as in the construction industry in Dubai or housekeepers in Europe and the United States. They are joined by a growing number of more educated personnel who are migrating, sometimes only temporarily, to enjoy better wages and living standards for their professions in the developed world, including doctors and nurses.

The paper, published in 2007, shows how a doubling in remittances worldwide in the last decade is leading to growing interdependency between the developed and developing world. The concern is that large industrialised countries are becoming over-dependent on cheap foreign labour while non-industrialised countries survive on remittances that their workers abroad send home rather than creating jobs and growth in their own economies.

The costs and benefits of this can be exploitative at times for less-developed and competitively inadequate countries compared to economically top notch developed nations or economic blocs. Critics have argued that globalisation has led to transnational capitalism increasingly monopolise and centralise capital by leading dominant corporations in the global economy. Scholars critical of global capitalism have argued instead in favour of a grassroots’ transnationalism by workers and co-operatives as well as through popular social and political movements.

William I. Robinson reveals his concerns about growing remittance interdependence in his 2010 paper ‘Global Capitalism Theory and the Emergency of Transnational Elites’. He objectifies capitalist transnationalism as the pursuit of facilitating the flow of people, ideas, and goods between different regions of the world in the belief that it has increasing relevance for the rapid growth of capitalist globalisation. Pro-capitalism critics argue that it does not make sense to restrict migratory workforces, globalised corporations, global money flow, global information flow, and global scientific cooperation. However, Robinson believes this is the very reason why there is a widening gap between the rich and the poor and has led to a corresponding rise in exploitation to the detriment of ‘true’ sustainable development at an international level.

Countries such as Cuba have been used by researchers as an example of worsening economic conditions and increased inequality due to remittance flows. At the extreme cases, some non-industrialised countries have had such a reliance on remittances as a source of economic revenue that without them, their economies would crash. These countries are said to be at the mercy of “foreign migration policy makers”. This trend may be also bad for the host country, as their dependency on migrants leads them to plan development policies based on migrants’ future contributions, seeing them as the answer to solve their state problems while otherwise being unable to solve it themselves (Levitt & Jaworsky, 2007).

On the flip side, Min Zhou, in her 2004 paper “Revisiting ethnic entrepreneurship: convergences, controversies, and conceptual advancements,” looks at the positive elements of international migration in breaking down social barriers and allowing further integration even while under the veil of discrimination.

Zhou brings into light the benefits of ethnic entrepreneurship. In accordance with McEwan Pollard, Henry argument, Zhou also believes that ethnic minority economic activity has a positive effect on a nation’s future economic development in increasing the range and diversity of both actual goods and foreign business know-how, whether it be ethnic food manufacturing or Chinese business networks (2005).

Transnationalism in itself – and cross-border ties in general – allows ‘valuable social capital’ to be instilled in ethnic communities to help them in their horizontal and vertical integration with the aim of breaking the inequality trend. This ‘social capital’ can help also the second generation to integrate better and start climbing the social ladder (Ruble, 2005).

Guarnizo brings to the table the notion that predicting remittance revenues are a measure of credit worthiness and secure loans for a state (2003). With these arguments, many governmental and non-governmental bodies have jumped on the “remittances-as-development-panacea” bandwagon (Kapur, 2005).

Having looked at the cost and benefits of remittances to economic growth, my next blog post will assess under what circumstances education does or does not succeed in socially integrating migrants.

References

Guarnizo, L. E. (2003). “The economics of transnational living.” International Migration Review 37:666-699.

Kapur, D. (2005). Remittances: The new development mantra? New York: United Nations.

Levitt, P., & Jaworsky, B. N. (2007). Transnational Migration Studies: Past Developments and Future Trends. Retrieved June 9, 2014, from http://policydialogue.org/files/events/Levitt_Jaworsky_Transnational_Migration_Studies.pdf

McEwan, C., Pollard, J., Henry, N (2005). The ‘global’ in the city economy: multicultural economic development in Birmingham. Blackwell.

Robinson, W. I. (2010). Global Capitalism Theory and the Emergency of Transnational Elites. UNU-WIDER.

Ruble, B. A. (2005). Creating diversity capital: Transnational migrants in Montreal, Washington, and Kyiv. Washington, D.C: Woodrow Wilson Center Press.

Transnationalism – Wikipedia, the free encyclopedia. (n.d.). Retrieved June 13, 2014, from http://en.wikipedia.org/wiki/Transnationalism

Zhou, M. (2004). “Revisiting ethnic entrepreneurship: convergences, controversies, and conceptual advancements.” International Migration Review 38:1040-1074.