Jamaican Chefs are in high demand overseas and they take up the offer too!DOES THE money really help? Shivani Puri, researcher, notes that for the most part, remittances are used for daily expenses such as food, clothing and health care basic subsistence needs and they make up a significant portion of the income of those households. Funds are also spent on building or improving housing, buying land or cattle, and buying durable consumer goods such as washing machines and televisions. Generally only a small percentage of remittances are used for savings and what is termed "productive investment," for example, income and employment-generating activities such as buying land or tools, starting a business and other activities with multiplier effects.
In light of this, do inflows reflect a potential for long-term, positive,
economic impacts?
Do remittances suffice as a means of improving recipients' standard of living?
The school of thought states that at a macroeconomic level, remittances often provide a significant source of foreign currency, increase national income, finance imports and contribute to the balance of payments. Remittances also have economic, social and political life and contributed to the expansion of wire transfer and courier companies as well as money exchanges.
Others, however, believe that remittances not only fail to help the economy but also decrease the likelihood of an improved economy. "The inflow of funds can be deceptive if it creates dependence among the recipients, encourages the continued migration of the working age population and decreases the likelihood of investment by the government or foreign investors because of an unreliable workforce," is one perspective.
These researchers also view remittances as unpredictable and as a cause of increasing inequality. Also remittances are frequently spent on imported consumer goods, rather than locally produced ones, decreasing the potential multiplier effect of the money and increasing import demand and inflation. In Korea and Pakistan, for example, it has been observed that inflation together with specific skill shortages resulting from migration has led to rising wage rates and dramatic changes in the relative price of labour. The availability of foreign exchange, together with growing demand for consumer goods not available in the domestic market, has been linked with a rising demand for imported goods.
