Lecture 12: Remittances or Gifts?

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Lecture 12 Remittances or Gifts?

• Are Remittances a substitute for Canadian Aid?

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Motivations

• Alturism One way
• For How long and to Whom?
• Implicit Contract
• For how long and to whom?
• Combination of both
• Does motivation differ by Immigration Status?
• Temporary vs. Permanet

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Canadian Case

• Why so little
• Less than 6 of total HH expenditures
• Less than 1/3 of foreign-born remit
• Largest Remittances by older vintage of
  immigrants
• What do remittances look like over life cycle?
• What is split between household and Charitable
  Remittances?

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Distribution of Remittances
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Table 3 Expenditure Elasticities for Remittances
to Persons Calculated from LA/AIDS, 1992/1996
Population Uncontrolled Uncontrolled Uncontrolled Controlled Controlled Controlled
Group Income Group Income Group Income Group Income Group Income Group Income Group
all top Y/2 bottom Y/2 all top Y/2 bottom Y/2
Unrestricted Canadian 1.07 1.27 1.19 1.88 1.73 1.83
Unrestricted N.Am.W.Eu. 1.29 1.43 1.67 2.28 2.14 2.23
Unrestricted SE European 1.01 1.11 1.09 2.07 1.59 2.29
Unrestricted Ch.,As.Oc. 1.09 1.12 1.09 1.10 1.13 1.09
Restricted for Homogeneity and Symmetry Canadian 1.09 1.25 1.20 1.86 1.70 1.78
Restricted for Homogeneity and Symmetry N.Am.W.Eu. 1.29 1.43 1.66 2.25 2.10 2.18
Restricted for Homogeneity and Symmetry SE European 0.98 1.06 1.08 2.08 1.60 2.36
Restricted for Homogeneity and Symmetry Ch.,As.Oc. 1.09 1.12 1.10 1.10 1.13 1.09
Notes Elasticity is computed through the formula
, where
is the actual mean expenditure share and
is the estimated household income coefficient.
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Household Transfers
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Charitable Remittances
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What is done with Remittances?

• Household consumption
• Who gets poorest or middle class
• Is it invested Schooling, capital equipment
• Two for One Mexico Programme
• Mexican Heroes to Mexican Exploited.
• Are remittances a substitute for Aid or FDI?

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Canadian Aid

• Size of Aid Programme
• 2004-05 ODA/GNI.32 or 14.4 billions
• What is UN goal? ODA/GNI1
• What countries achieved above?
• Composition of Aid Programme
• ODA Official Development Assistance
• ODA is
• concessional in nature, provided by official
  government bodies for development purposes

10
Canadian Aid

• What is Case for Aid?
• Humanitarian and economic
• What percent of Canadian aid Humanitarian
• Disaster relief, Vitamin A, HIV-AID
• What percent of Canadian is for economic
  development ?
• Industrial Aid, foreign student training, good
  governance
• Who should get Aid ?
• Should it be distributed by need or by level of
  development?
• Should it be distributed through multi-national
  bodies ?
• Harder Case

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Canadian Aid

• Economic Case
• Foreign Exchange gap Is difference between the
  following
• IdIf lt SdSf
• where Sd domestic savings in local currency
• Where Sf Savings held in foreign hard curreny
• Where Id Investment component financed
  domestically
• Where Id Investment component must be financed
  with hard currency

12
Canadian Debate

• Debate 1 Canada versus the Poor World
• Be it resolved that Canada suspend its Aid
  programme and replace it with free trade in all
  products from your country and unlimited
  immigration from your country.
• Two teams 3 players each.. Winner receives 4
  bonus points, Second Place 2 points.
• Team A Consists of only Canadians and represents
  Canadas interests
• Team B Consists of only representatives of
  Xenandu a typical underdeveloped country

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Debate Who should get Aid

• Class Assignment 3
• Due Week of October 30th in your Tutorial
• You have been asked by your boss, Mr. Peter
  Harder who heads Canada's aid programme (CIDA) to
  outline an argument to justify why your country
  is deserving of a portion of Canada's 100
  billion aid package. Using one economic, social,
  demographic indicator outline a case for your
  country. The basic components in this argument
  are
• A clear description, which outlines why your
  country is poor, but deserving. This would
  involve use of one economic, social and
  demographic indicator shown in the movie but also
  a discussion to demonstrate what positive
  features of your country, good gov't, health
  indicators, exports, education, or low population
  growth that indicates a capacity to use the aid.
  State exactly what the indicators are for
  example health would be life expectancy, infant
  mortality rate, etc.
• Outline what specific forms of aid to alleviate
  what are the weak points of your economy as noted
  in your indicators. For example, my country has a
  high infant mortality rate this would imply that
  it is poor but that health aid could alleviate
  this problem. Use at least four types of aid
  education, health, agricultural, policing, water,
  resource conservation, etc. to illustrate your
  country's specific needs.
• Once you establish what type of aid is required,
  explain the connection between this form of aid
  and your country's future prospects of
  development.
• Conclusion Tie together your indicators, your
  country's plight and a full description of the
  aid package in the final paragraph and make a
  recommendation to Peter Harder. The
  recommendation is for a specific form of aid, for
  a specific period of time and for a specific
  amount
• Use 500 word maximum.