Morrison

The Christmas buzz and shopping spree are going to be subdued this season, given the year-long slide in the economy, job losses and the uncertainty about future prospects. Added to these, remittance flows, which usually reach a peak around this time of year and provide a fillip to Christmas spending, are expected to be down. Still, the ties with the Jamaican Diaspora are so strong that, as the holidays approach, we could see a pick-up in the flows compared with previous months.

There won't be extra money to splurge on elaborate parties, impulsive shopping and general merrymaking. But Jamaicans abroad will strain to send 'something' home for their elderly family members and children as they have always done - in the best of times and the worst of times. The picture is similar in other countries in Latin America and the Caribbean, where remittances play a big part in the social-welfare system, with relatives trying to keep up the regularity of flows but sending smaller amounts for each transaction.

remittance flows

Jamaica, with a diaspora equal to the size of the home population, is among the top recipients of remittance flows per capita. These flows have grown rapidly in recent years, outstripping tourism, bauxite and foreign-direct investment, to become our leading source of foreign-exchange inflows. Last year, remittances exceeded US$2 billion for the first time. Even with a double-digit decline, which seems likely for this year, I expect remittances to be around US$1.8 billion, maintaining its position as the top net source of foreign-exchange inflows, and this, for the foreseeable future.

While Jamaica is at the pinnacle of receiving countries of migrant remittances in per capita terms, India, which has the largest diaspora of 25 million spread over 136 countries, was the largest recipient last year ,with inflows of US$52 billion, a leap of 34 per cent over 2007 - about four per cent of its GDP. China was next with nearly US$40 billion, and then Mexico, which received inflows of just under US$30 billion. But, this year, all of these countries are experiencing declines, as total inflows worldwide are set to fall by over seven per cent.

strong fears

In the case of India, there are strong fears that the fallout from the debt crisis in Dubai could cause massive dislocation of migrants and aggravate the fall in remittances from the United Arab Emirates, which account for over 25 per cent of its total remittance inflows. The Middle East, especially Dubai, is a key market for short-term job contracts for Indian overseas workers and particularly professionals with technical skills and, in some south India states like Kerala, remittances contribute more than 20 per cent of GDP. The impact in these states could therefore, be severe, but indications are that the overall effects on the Indian economy may be far less pronounced.

From the days of the British imperial economy, when over 1.6 million Indians left India between the 1820s and the 1920s to work as indentured labourers on plantations in Caribbean, African, Indian Ocean and Pacific colonies, to the late 20th century, the Indian Diaspora has maintained its cultural identity and strong ties to the homeland. In the second half of the 20th century, this diaspora took on a more significant role in the Indian economy as "birds of passage" in rich countries that provided increasing amounts of remittances to supplement hard-currency supply.

The intention was always to return home after accumulating enough to take care of basic needs. The low-skill West Indian Diaspora also had this focus at the time of migration in the 1950s and 1960s. West Indian farm-workers and other contract labour to the USA and Canada have continued in this mode.

The Indian Diaspora has, however, evolved since the 1970s into high-skill and low-skill networks, with the high-skill stream coming into prominence in technology and finance in North America and Europe. Unlike its Jamaican counterpart, the high-skill Indian Diaspora is now playing a decisive role in domestic development as visible agents of technology transfer and mobilisers and facilitators of foreign-direct investment. In particular, US-based Indian managers have been key contributors to the spectacular surge in information technology and related services in India's economy, turning the "brain drain to brain circulation".

restoring confidence

Many of these managers came to the USA as expatriates in the 1960s and 1970s, becoming CEOs and senior executives at US technology companies by the 1990s. In these positions, they were able to give confidence to their companies to outsource work to India and to be patient sponsors of emerging firms that are now global giants in the information technology field - Wipro and Infosys. Thus, the Indian software industry grew by 40 per cent a year since the 1990s, with employment expanding ten-fold, pulling in most of the 75,000 information technology graduates produced in India every year.

With the active participation of its diaspora, India was able to capitalise on the Internet and telecoms boom to make this leap forward, but it could not have achieved this without the government's emphasis on higher education and the surplus of scientists, engineers and technicians.

Jamaica continues to view its diaspora as a welfare source, assigning to it a limited role in our social and economic development. The pockets of high-skill and managerial influence are still to be weaved into powerful networks for investment and trade as in the case of India or China and in some Latin American countries. Meanwhile, remittance flows to Jamaica are being primarily allocated to consumption or unproductive uses.

Dennis Morrison is an economist. Feedback may be sent to columns@gleanerjm.com.