E X P O R T I N G C I T I Z E N S , I M P O R T I N G R E M I T T A N C E S The Developing World's Newest Strategy to Combat Poverty C H R I S T O P H E R M A R O S H E G Y I T O D A Y , T H R E E P E R C E N T O F T H E W O R L D ' S P O P U L ATI O N L I V E S A N D W O R K S O U T S I D E ITS C O U N T R Y O F B I R T H . T H I S R I S E IN M I G R A T I O N H A S L E D T O A S U R G E IN R E M I T T A N C E S , W H I C H N O W R E P R E S E N T T H E M O S T IM P O R T A NT S O U R C E O F I N C O M E F O R M A N Y D E V E L - O P I N G C O U N T R I E S . T H I S P A P E R W I L L F O C U S O N T H E D E B A T E S U R R O U N D I N G T H E I M - P A C T O F R E M I T T A N C E S O N P O V E R T Y A M O N G B O T H R E C E I V I N G H O U S E H O L D S A N D T H E N O N - R E C E I V I N G C O M M U N I T Y IN T H E C O U N T R Y O F O R I G I N , C O N C L U D I N G T H A T R E - M I T T A N C E S H A V E A H I G H E R P R O P E N S I T Y T O BE I N V E S T E D IN E D U C A T I O N , H E A L T H , A N D E N T R E P R E N EU R S H I P T H A N N O N - R E M ITT A N C E B A S E D I N C O M E . ITS F I N D I N G S H I G H L I G H T T H E P O T E N T I A L O F A S U S T A I N A B L E M E T H O D O F S O U T H - T O - S O U T H D E V E L - O P M E N T T H A T MAY V E R Y W E L L R E D E F I N E H O W P O L I C Y M A K E R S A P P R O A C H M I G R A T I O N A N D D E V E L O P M E N T . I N T R O D U C T I O N The growing demographic and economic dichotomy be- tween the developed and developing world continues to fuel the rise of international migration into the twenty-first century. Today, 3% of the world's population—175 mi l - lion—live and work outside their country of birth, a phe- nomenon highlighted by a movement of workers from less developed countries to more developed countries. This large migratory flow brings with it heavy social, political, and economic baggage, affecting both the new host country and the country of origin. Early research on international migration has been dominated by a focus on the negative aspects of international migration, highlighting its drain not only on its new host society, but also on the negative consequence of migrants on the economic development of sending countries. Only recently have governments, scholars, and members of the civil society begun to explore the potential benefits of in- ternational migration on the development of the countries of origin, long thought to be the biggest losers of the out- flow of human capital. One of the biggest reasons for this changing mindset is the rise of international migrant re- mittances sent back from their host country to family i n their country of origin. As remittances surge and begin to outstrip development aid to the developing world i n terms of income flow, policy makers and scholars have engaged i n a debate about whether remittances can contribute to devel- opment i n receiving countries and, i f so, which policies should be enacted to maximize inflows and benefits. This paper wi l l focus on this debate of the impact of remit- tances on the developing world with a particular investiga- tion on its effect on poverty among both receiving house- holds and the non-receiving community i n general. Using numerous studies conducted around the world, this paper wi l l show that remittances do i n fact have the potential to reduce poverty. By increasing household income, remit- tances have a higher propensity to be invested i n education, health, and entrepreneurship than non-remittance based income. I N T E R N A T I O N A L W O R K E R M I G R A T I O N : SCOPE A N D T R E N D S International migration is not a new phenomenon. The nineteenth and twentieth centuries witnessed a mass mi- gration of millions of workers to the shores of America and Australia. Recent decades, however, have seen an unprece- dented rise i n migration. The number of international mi- grants rose from 76 mil l ion i n i 9 6 0 to 80 mil l ion i n 1972 and has since more than doubled to over 175 mil l ion mi - grants throughout the world.' This latest wave of migration has been dominated by a trend of migrants moving from less developed countries to industrialized, developed coun- tries i n the Organisation for Economic Co-operation and Development (OECD). While the growth of South to South migration—migration between two developing coun- tries—actually fell over the past decade, migration to indus- trialized countries has notably been increasing since the 1970s. Each decade from 1970 to 2000 witnessed a 2.4%, 2.9%, and 3.1%, growth i n migrants destined for industrial countries, respectively.11 Migration i n North Africa and the Middle East presents a more complicated picture. Both regions are characterized as labor sending and receiving countries with massive out- flows of migrants from the Maghreb to Europe and an equally impressive inflow of Asian and Indian migrants to the Gulf States. Further complicating the picture is—at least unti l recently—a strong trend towards interregional migration from Arab countries to the Gulf (a phenomenon which is increasingly being reduced thanks to the influx of Asian and Indian workers to f i l l labor intensive, low wage jobs). Jordan, Syria, and especially Egypt sent large num- ber of workers to the Gulf, which, coupled with Asian and Indian workers, represented 40% of the Gulf's population at its peak i n the 1990s.1'< • In fact, recent statistics have re- vealed that South to South migration is again on the rise after decades of decline, with the region hosting a growing number of South to South migrants. Nearly 2% of North Africa and the Middle East's population are migrants, par- ticularly from Asia, India, and Sub-Saharan Africa, a trend which looks to continue i n the future as migrants from ELEM ENTS : : FALL 09 S C O P E The sheer size and pace of the growth of remittances place it at the forefront of the migrant led development discus- sion. I n 1970, when remittances first emerged as a serious topic of debate and statistical record, international migrant remittances totaled only $2 b i l l ion . v n In just a few years time, the later part of the decade saw an average amount of remittances numbering $7.8 bil l ion. ' 1 1 1 Remittances dou- bled i n one year from 1979 to 1980, when they amounted to $18.4 billion. Since then, remittance flows have experi- enced an almost exponential rate of growth. The annual av- erage soared 12 times the amount sent during the mid- 1970s to $98 billion between 1998 and 2003. By 2003, gross flows of remittances to developing countries equaled $142 billion. Even the yearly growth is truly staggering. 2004 witnessed a nearly $20 billion increase i n remit- tances to $160—a 66% increase i n the gross receipt of mi - grant remittances of developing countries between 2001 and 2004. This growth shows no sign of letting up in the future. As statistics continue to pour in , the World Bank es- timates that i n 2007, migrant remittances may very well have totaled over $300 billion—doubling the amount of in- come flowing into the world's poorest countries i n a span WORKERS REMITTANCES AND OTHER FOREIGN EXCHANGE FLOWS TO DEVELOPING COUNTRIES, 1970-2003. • ; C C E X P O R T I N G C I T I Z E N S , I M P O R T I N G R E M I T T A N C E S Sub-Sahara continue to flood the Maghreb.1V Compared to other regions of the world, however, the Middle East and North Africa have lower emigration flows. Lebanon is the only country i n the region with an emigra- tion rate over 10%, and Morocco, long the leader of labor ex- portation i n the region, sends less than 8% of its labor force abroad.v By contrast, nearly half of Latin American and Caribbean countries have over 10% of their labor force liv- ing abroad.vl R E C E N T R E M I T T A N C E T R E N D S : SCOPE A N D FACTORS As the number of international migrants—particularly to industrialized countries—rises, so too does the amount of income sent back to developing countries i n the form of re- mittances. Scholars and governments, who began to change their policies recently i n order to develop better ties with their migrants and to encourage more remittances, have come to recognize remittances as a substantial and in- creasingly important source of income for developing countries. of just four years.x The magnitude of this rise is best understood when exam- ined within the context of other macroeconomic indicators available i n developing countries. In North Africa and the Middle East, worker remittances accounted for anywhere between 2% and 22% of their Gross Domestic Product (GDP). Egypt, the largest recipient of remittances i n the re- gion during the 1990s and among the highest net remit- tance recipients relative to net migration i n the world, re- ceived an average of US$3,279 billion accounting for 5.45% of its entire GDP throughout the decade.A Morocco, also among the highest net remittance recipients relative to net migration i n the world, experienced a remittance to GDP percentage of 4.24% during the i990s . x i i These GDP statistics reveal the magnitude and, i n effect, the importance of remittances to developing countries. But simply examining the amount of remittances to GDP is not enough. To fully understand the magnitude of remittances to the developing world, one must conduct a cross-analysis of remittance flows with other sources of income for devel- oping countries. Characterized by narrow domestic mar- kets and a scarcity of investment and capital, poor countries depend heavily on outside sources of income, including foreign direct investment (FDI), development aid, and run- ning a budget deficit. Remittances have been shown to be both more sustainable and stable than more volatile sources of foreign income, in- cluding FDI and development aid. x l i l As the figure above reveals, remittances long ago outstripped development aid and non-FDI private capital inflows to become the second largest source of income for developing countries. Analyzing the flows of the different incomes, the stability of remittances quickly becomes apparent compared to the volatility of FDI. I n 2004, remittances accounted for more than 5% of developing countries' imports and 8% of do- mestic investment. x i v F A C T O RS Because individuals migrate for different reasons, scholars have yet to reach a consensus regarding the most important factor determining the amount and motive of specific mi - grant remittances. Three trends are apparent when analyz- ing the factors behind migrant remittances: altruism (as- sisting family and friends in need), insurance (providing family back home with a source of income were there to be MIGRANT REMITTANCES ARE SENTTHROUGH VARIOUS MONEY TRANSFER AGENTS. a shock or disaster), and investment (either for family left behind or as a move to accumulate assets for an eventual re- turn of the migrant). Studies have shown that remittance factors vary significantly across countries and migrant situ- ations. Additionally, migrants utilize a wide variety of tools to facil- itate their remittance transfer, including banks, credit unions, financial transfer companies, postage, and hand delivered cash. The factors determining which channel a migrant wi l l use—formal or informal—to transfer his in- come varies from situation to situation. It has been noted that the main obstacle migrants face when trying to utilize formal channels, and thus more secure and efficient means of transfer, is the sheer absence of banking facilities or sim- ilar financial services connecting their host community with their community of origin. x v In many cases, especially in Africa, the financial network needed to transfer remit- tances simply does not exist i n rural communities. E L E M E N T S FALL 09 However, the mere existence of these financial networks does not guarantee that a migrant wi l l utilize them. High transfer costs are another main obstacle migrants face i n utilizing formal channels, reducing both the volume and the effect of these potentially massive flows. Banks and credit unions usually levy high fees for transfer- ring cash around the world, charging migrants both a fee for the transaction and a commission on the amount of cur- rency converted. Ghosh highlights the astronomical cost for these often low skilled and low income earning mi - grants: the average cost of sending $200 f rom a sample of 6 countries—France, Germany, Saudi Arabia, South Africa, the United Kingdom, and the United States—to 14 receiving countries around the world totaled 6% i f sent through transfer companies, 7% i f sent through banks, and 12% i f sent through international money transfer compa- nies such as Western Union. Examining transfer costs to individual countries, especially among the leading remit- tance recipients, reveals even higher costs. Moroccan mi - grants, who send back the fourth highest amount of remit- tances i n the world, face a stiff average transaction cost of I4%. x v i Much to the detriment of migrants, these high fees do not actually represent the true cost of transfer borne by financial institutions. Rather, these high fees can be blamed on the imperfection of the financial sector, includ- ing a lack of competition coupled with a lack of efficiency i n developing countries. As a result, almost a fifth (17%) of in- ternational migrants still use informal channels of remit- tance transfer, including mail and hand delivery.NV" This study by Ghosh highlights the untapped potential of policy interventions i n improving financial markets and thus re- ducing costs i n order to increase the volume of formal re- mittances. R E M I T T A N C E S A N D POVERTY Given the increase i n remittance flows to developing coun- tries over the past decades, scholars have begun to analyze the effect of remittances on the economic development and growth of receiving countries. A watershed moment i n the debate came i n 2005, when the World Bank concluded that remittances do i n fact have a positive effect on the develop- ment and welfare of receiving countries, a claim which has since been supported by numerous studies. The debate has revolved around the nature of remittances, which many characterize as a private transfer of income used not for productive investments, but rather for consumption of basic commodities. Because of the private nature of remit- tances and the historical failure of governments to capture the income flows for greater development uses, many scholars have argued that remittances are nothing more than a method to increase household consumption i n re- ceiving countries, and may i n some instances actually harm the receiving country's economy. Led by the World Bank, a growing number of scholars and studies have emerged to support the positive impact of remittances on development and especially poverty, both from the macro- economic and microeconomic side. "In communities where a majority of a households' small income goes towards mere survival, remittances allow these families to appropriate greater income towards human capital, which is in itself the most important investment for the future of these communities." E X P O R T I N G C I T I Z E N S , I M P O R T I N G R E M I T T A N C E S R E M I T T A N C E S A N D T H E M I C R O - E C O N O M Y : D I R E C T P O V E R T Y R E D U C T I O N The debate of the microeconomic effects of remittances re- volves around the perceived household use of this newly found source of income. A review of relevant literature re- veals that there is general agreement that most remittances are used for household consumption purposes, rather than what economists would coin productive investment. x v i i i Using this as ammunition, some scholars dismiss the de- velopment potential of remittances, writing them off as pure consumption-based income. This analysis, however, misses the productive elements of consumption, especially i n such poor countries. I n these communities, consump- tion of goods such as education and healthcare represent a type of productive consumption investing i n human capi- tal. In fact, numerous studies have shown that "many of the consumption investments financed by remittances make positive contributions toward human development in poor areas," including "spending on nutrition, health, and education."X 1 X I n communities where a majority of a household's small income goes towards mere survival, re- mittances allow these families to appropriate greater in- come towards human capital, which is i n itself the most im- portant investment for the future of these communities. John Page and Sonia Plaza put forward one of the most comprehensive studies on remittances and poverty reduc- tion, using a data set that includes statistics on migration, remittances, and poverty for 74 developing countries. The report finds that remittances have a strong impact on re- ducing poverty i n recipient countries across the world: "A 10% increase i n the share of international migrants i n the population or of remittances received i n GDP reduces the fraction of people living on less than one dollar per day by 1.9% and 1.6% respectively. " x x I n addition to lifting indi- viduals out of poverty, the study found that an increase i n remittance also reduces the depth and severity of poverty. Nikola Spatafora's 2005 study of 101 developing countries throughout 1970-2003 reached many similar conclusions. Measured by use of poverty headcounts and the poverty gap between high and low income individuals, Spatafora ar- gues that there is a clear inverse relationship between the level of remittances and poverty—the more the remit- tances, the lower the level of absolute poverty. There is clear evidence that remittances reduce poverty i n the developing world especially when unofficial remittances are taken into account. a Case studies i n some of the poorer remittance recipient countries highlight the impact of remittances i n even the poorest of communities. A study done i n Burkina Faso—ranked second to last on the UN's human develop- ment index—reveals that remittances have led to a reduc- tion of poverty by 7% i n rural areas and by 3% i n urban areas.xx i i Contrary to one of the greatest criticisms levied against re- mittances—that they do not flow to the poorest countries and households—this significantly highlights the potential of remittances to reach even the poorest of the poor. This is further supported by a household survey conducted by Ratha, which suggests that remittances have significantly reduced the poverty headcount i n several low-income coun- tries "by 11 percentage points i n Uganda, 6 percentage points i n Bangladesh, and 5 i n Ghana. In Nepal, remit- tances may explain a quarter to a half of the 11 percentage- point reduction i n the poverty headcount rate over the past decade (in the face of a difficult political and economic sit- uation)."™" E D U C A T I O N A N D H E A L T H A main reason for the reduction i n poverty, besides the in- herent rise i n income for impoverished households, is the tendency for remittent receiving households to invest i n human capital, especially education and healthcare. In fact, Richard Adams, Jr. reveals, that "households receiving remittances actually spend less at the margin on [basic] consumption—food and consumer goods and durables— than do households receiving no remittances. ' , x x i v Specifically, Adams finds that a particularly large amount of remittance income is spent on education i n receiving coun- tries, especially on the margin, where "households receiv- ing internal and international remittances spend 45% and ELEM ENTS FALL 09 58% more, respectively, on education than do households with no remittances. , , x x v REMITTANCES REDUCE POVERTY IN RECI PI ENT COU NTRI ES ACROSS THE WORLD. A number of other studies make the same conclusion about the higher propensity to "consume" education by re- mittance recipients. A recent study conducted by Dean Yang, which analyzed the impact of remittances i n the Philippines, found that "a rise i n remittances of 10% of ini - tial income wi l l increase the fraction of children, aged 17 to 21, attending school, by more than 10 percentage points ." x v 1 The impact of remittances is especially evident i n El Salvador, where roughly 15% of all households re- ceived remittances i n 1997. Surveying a large sample of 14,286 individuals aged 6-24, the study made the fairly rep- resentative conclusion that remittance income i n El Salvador has a much larger impact on school retention than any other source of income, including official a i d . x x v n Providing households with the additional income needed to allow their children to attend school—poor households often rely on child labor for supplementary income or sim- ply cannot afford the costs of education—it was found that " i n urban areas the average level of remittances lowers the hazard that a child wi l l drop out of elementary school by 54%" and that "the average level of remittances i n rural areas lowers the hazard rate that a child wi l l drop out of el- ementary school by i 4 % . " x x v m Healthcare also received considerable attention from re- mittance recipients and their higher incomes. The Mexican Migration Project, which studies migration flows from the United States and Mexico, found that three quar- ters of migrants i n the United States who remit a portion of their income spent a portion of their funds on healthcare. x x l x This is backed up by research done by Frank and Hummer i n 2002, whose study argues that children born into remittance receiving families are healthier at birth and exposed to less health risk than non-remittance receiving households. Lopez Cordova provides some im- pressive statistics to sustain these claims, concluding that " i f the fraction of remittance-receiving households in- creased by five percentage points, starting from zero, infant mortality falls by almost 5%, children's school attendance rises by more than 3%, and illiteracy drops by 34%.' > x x x The increased income as a result of remittances not only improves health access, but also health knowledge, an es- sential tool i n especially poor and rural areas where health- care may be limited. A study presented by Plaza and Sonia found that mothers i n migrant households have more health knowledge than their counterparts i n non-migrant households, importantly, they also f ind significantly higher levels of health knowledge among non-migrant house- holds i n high migration communities, supporting the hy- pothesis that knowledge spillovers exist within these com- munities/™ I N V E S T M E N T S As the effects of remittances on health and education be- come established, many skeptics still point out that remit- tances are rarely, i f ever, used on productive investment such as starting a business, and therefore are out of the pol- icy scope of development goals. Early studies did make strong arguments that remittance income was used mainly for consumption. I n his review of international remittance trends, Dovelyn Rannveig Agunias points out that i n Latin E X P O R T I N G C I T I Z E N S , I M P O R T I N G R E M I T T A N C E S America, more than 80% of remittance receiving house- holds reported using their new income to cover basic neces- sities. x x i a i There is, however, a growing body of evidence to suggest that productive investments vis-a-vis remittances, espe- cially i n low-income countries, are actually on the rise. Adams finds that i n Guatemala—a country ranked 118th on the UN's Human Development Index—a majority of re- mittance income was not spent on basic goods. The study found that "at the mean level of expenditures, households without remittances spend 58.9% of their expenditure on consumption goods compared to 55.9% on the part of households receiving international remittances. "»«m Adams suggests, along with a growing number of migrant scholars, that households have a higher propensity to invest their remittances than ordinary income because remit- tances are seen as temporary income. The temporary na- ture of the income prevents frivolous consumption as "This bottom-up process allows income to flow exactly where it is needed without flowing through the inefficient channels of governments or foreign investors who lack the in-depth knowledge which migrants possess about their own country." households seek to extend the impact of what they see as a short term inflow of cash. A small but growing number of studies have concluded that remittances are increasingly being spent on entrepre- neurial investments. For example, it has been found that a fifth of the capital invested by Mexico's microenterprises was directly funded by remittances from the United States, a number which "reaches 40% i n states with a high num- ber of immigrants to the United States." ' A similar trend is emerging i n the Caribbean, where remittances are having a positive impact on private investment. In a study done across 13 countries i n the region, a 1% increase i n re- mittances is linked to a 0.6% increase i n private invest- ment . x x x v Egypt, characterized by a large population of tem- porary emigrants who intend to return to their communities, has also witnessed a rise i n investment from remittances, particularly i n housing.N X X V 1 The longer Egyptians spend abroad learning skills and the more in- come they earn, the more likely they are to become entre- preneurs upon r e t u r n . x x x v " As Aquanis points out, remit- tances have been fueling a bourgeoning class of migrant led entrepreneur ship: These recent findings complement earlier studies suggesting that remittances have been critical to the capitalization of migrant-owned businesses. As early as 1990, Escobar and Martinez suggest that 31% of migrants surveyed in Guadalajara used U.S. savings to set up businesses. Cornelius's study located in three rural Mexican communi- ties suggests an even higher percentage of businesses founded through remittances.*™™ R E M I T T A N C E C R I T I C I S M S Despite these encouraging results, a number of reserva- tions remain about the impact of remittances on poverty re- duction and development on the whole. I n addition to crit- icisms that remittances lead to Dutch Disease and inflation, some scholars worry about the moral hazards to receiving governments as a result of this new windfall in- E L E M E N T S FALL 09 come.x x s 1 x By exporting their labor and reaping the benefits of their income that is sent back, governments can ignore the root of the economic problem which sent their m i - grants off i n the first place. At the macro level, government policy "ignores economic imbalances (e.g. trade deficits) and fails to pursue needed economic reforms as it antici- pates getting a big slice of dollar remittances every year from migrant workers." It might even "pursue politically beneficial but economically unwise policies" as long as re- mittances insulate the economy from the negative impact of these policies."x l Given that many of the receiving countries are character- ized by either poor, corrupt, or authoritarian governments (or a combination of all three), this is an especially salient observation. Despite the probability of this theory, there can be no direct linkage between remittances and moral hazard at the state level, especially links that would override the microeconomic benefits of remittances. And while it is out of the scope of this paper to examine the role of the Diaspora on governance and reform, a growing academic consensus on its potential, especially i n the case of India, has recognized its benefit and potential to negate this moral hazard and induce governmental reform. Other skeptics point out that remittances actually work to exacerbate inequality i n receiving states. This argument rests on the statistics which reveal that it is not the poorest who migrate. Rather, because of the high costs of migra- tion, it is the upper-lower classes and above which mainly benefit from migration and remittances—especially given the direct and private method of income transfer. This the- ory is highlighted by studies conducted i n both rural Egypt and Pakistan, where data indicates that remittances have led to a sharp income inequality between migrant and non- migrant families. I n Egypt, households i n the second and third poorest quintile send the least amount of migrants abroad and are severely underrepresented i n remittances. According to Adams Jr., It is these variations in the number of migrants produced by different income groups—and not differences in either mi- grant earnings abroad or marginal propensities to remit— that cause international remittances to have a negative ef- fect on rural income distribution.*^ A number of studies and theories have emerged to ques- tion Adam's criticism. In fact, a study of remittances i n rural Mexico has concluded the opposite, suggesting that remittances actually marginally reduce income inequality. ; : Rather than exacerbating inequality, a num- ber of other studies conducted i n Latin America have con- cluded that remittances either have a marginal role or a neutral role i n reducing poverty. It has also been found that while inequality may worsen i n the short run, " in the long run the income distribution [of remittances] becomes more equal through the liquidity provided for capital accu- mulation" and the multiplier effect. x l i v Especially apparent i n demand-deficient economies— where incomes are too low to fuel domestic markets—the massive flow of remittances can induce higher incomes for non-migrant families through the consumption and invest- ment multipliers of remittance receivers. Robert E.B. Lucas notes that "as migrants' families increase their con- sumption of services or goods produced i n sectors with ex- cess capacity, the additional demand can create jobs for other families who i n turn spend and create further de- mands. " x l v A n overarching effect on equality has yet to be found, and its effect varies from country to country depend- ing on the nature of a given country's migration. C O N C L U D I N G R E M A R K S As official development aid continues to decline and devel- oping countries continue to grapple with development is- sues, migrant led development is increasingly being re- garded as a potential engine of poverty reduction and economic growth. In fact, with migrant remittances to de- veloping countries estimated to be over $300 billion annu- ally—and billions more that go unaccounted for—remit- tances have the potential to turn what was once regarded as the developing world's greatest Achilles' heel—the loss of E X P O R T I N G C I T I Z E N S , I M P O R T I N G R E M I T T A N C E S its skilled human capital—into a potential source of devel- opment for these desperate countries. Remittances are es- pecially appealing given their source—as remittances out- strip development aid from richer countries, the poor are beginning to support the poor more than the developed world is. This bottom-up process allows income to flow ex- actly where it is needed without flowing through the ineffi- cient channels of governments or foreign investors who lack the in-depth knowledge which migrants possess about their own country. This self-led development wi l l lead to more sustainable and beneficial long term development. Remittances are more than a simple private transfer of in- come spent on immediate consumption. Rather, studies have shown that remittances have a direct impact on reduc- ing poverty by allowing households to invest i n human cap- ital, including education and healthcare. The benefits are also apparent i n the macro-economy, where, despite the on- going debate, remittances provide capital strapped coun- tries with the ability to finance development projects. The recorded ability of remittances to reduce poverty through development is only the tip of the iceberg, how- ever. Through appropriate policy measures of providing a banking infrastructure and incentives to migrant remit- ters, remittance flows can be expanded and their effect on poverty enhanced. By bringing Multilateral Financial Institutions (MFIs) into the fold, remittances would flow to poorer and more rural households, while at the same time providing the capital to lend to and develop the very same economies. MFIs, with lower cost, are able to open branches i n areas where traditional banks cannot, extend- ing the reach of remittances outside of urban communities. Leveraging remittances for development through financial institutions, especially MFIs, would lead to higher income and development for entire receiving communities and states, not just direct remittance recipients. This would, i n turn, lead to less reliance on migration and remittance i n the first place. Thus, the goal should not only be to cultivate a greater flow of remittances but, rather, to focus on provid- ing the income and infrastructure for developing countries to reduce their reliance on migration and become self-suf- ficient and developed. E N D N O T E S i . Page (3) i i . Ibid. i i i . Kapiszewski (3) iv. Page (54) v. Adams 2006 (3) vi . Ibid. v i i . de Haas (605) v i i i . Ghosh (7) ix. Ibid. x. Newland xi . Hatton (335) xi i . Ibid. x i i i . Lucas (156) xiv. Page (9) xv. Page, Ghosh xvi. Ghosh (10) xvii. Aqunias xvii i . Eversole xix. Eversole (306) xx. Page (19) xxi. Munzele 2005 xxii. Lucas "Migration and Economic Development" (369) xxiii . Ratha, Leveraging Remittances (5) xxiv. Adams 2005 xxv. Ibid. xxvi. Page (20) xxvii. Adams 2006.(6) xxviii. Ibid. xxix. Eversole (306) xxx. Page (20) xxxi. Ibid. xxxii. Aqunias (25) xxxiii. Ibid. xxxiv. Aqunias (26) xxxv. Ibid. xxxvi. Ibid. xxxvii. Adams 2006 (6) xxxviii. Aqunias (25) xxxix. 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