Overview

Abstract (English)

Remittances-the money immigrants send to family members in their country of origin-have a long tradition. But with today’s global networks of financial institutions and telecommunications technologies, the transmission of funds worldwide now takes place at a pace and volume unimaginable earlier. Considerable work is underway both nationally and internationally to measure remittance flows. The World Bank estimates flows to developing countries at US$167 billion in 2005 (World Bank 2006). This is likely an underestimate as some remittances through formal channels, such as post offices or exchange bureaus, and remittances below a minimum threshold, are often not recorded in official estimates. Furthermore, remittances through informal channels, like family or friends, generally go unrecorded. Such unrecorded remittances could add 50% or more to the total. Remittances represent an important revenue source for developing countries. In absolute terms, India (US$21.7 billion), China (US$21.4 billion), and Mexico (US$18.1 billion) top the list (World Bank 2006). In proportional terms, the importance of remittances to many smaller countries is evident. For example, remittances account for about 20% to 30% of GDP in Tonga, Moldova, Lesotho, Haiti, Bosnia and Herzegovina, and Jordan, and for about 10% to 19% in several others, such as Jamaica, El Salvador, the Philippines, the Dominican Republic, Lebanon and Nepal. The importance of remittances can also be related to national industries. For example, remittances to Mexico “…are more than the country’s total tourism revenues, more than two-thirds of the value of petroleum exports, and about 180% of the country’s agricultural exports.” (Inter-American Development Bank 2004). More broadly, in 28 countries, remittances are “…larger than the earnings from the most important commodity export.” (World Bank 2006) Remittances often also exceed overseas development aid and foreign direct investment. Recorded estimates of remittance flows to developing countries show a marked increase in recent years, rising by 73% between 2001 and 2005. This trend has been evident across a wide range of nations (World Bank 2006). Many factors are likely at play, including improvements in data collection, a shift from informal to formal networks and developments within the remittance industry (World Bank 2006; Orozco 2006). While a great deal of Canadian research continues to focus on the labour market and income characteristics of recent immigrants, little attention has been paid to their expenditures, of which remittances are one component.1 Their preferences or obligations to send money to family members abroad may have implications for other aspects of settlement, such as housing or employment decisions. And while high rates of low income underscore the financial constraints often faced by new Canadians, such figures do not take into account any income used to support family members abroad. From a macroeconomic perspective, household data on remittances contribute to understanding international financial flows and play a role in the development of concepts and measures for systems of national accounts and balance of payments. Internationally, agencies such as the International Monetary Fund, World Bank, and Inter-American Development Bank (IADB) are interested in the institutional characteristics of bilateral remittance corridors. Indeed, “…efforts are underway to induce users [remittance senders] to shift from informal to formal systems in order to increase the transparency of remittance flows and enhance their contribution to development in the recipient countries.” (Hernández-Coss 2006) The Multilateral Investment Fund of the IADB identifies better documentation of the importance of remittances, reduced transaction costs and improved leveraging of the development impact of remittances as key objectives (Orozco 2002). Information on the entire remittance process, from senders to recipients, is needed to build a complete picture of this complex phenomenon. Despite the ongoing interest, research on the characteristics of remittance senders in Canada remains quite limited, largely because of the absence of data. More broadly, studies are often focused on immigrants from only one or two source countries. This study uses the Longitudinal Survey of Immigrants to Canada (LSIC) to document the prevalence of remitting and the amounts remitted by immigrants from a wide range of countries (see Data source and methodology). The incidence of remitting by the 2000/2001 landing cohort ranged from less than 10% to about 60%; the average amounts ranged from about $500 to almost $3,000 per year. financial and family characteristics were consistently significant among immigrants from all regions, but other factors, such as sex and education, were significant for only some.

Abstract (French)

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