Croats abroard transfer a million Euros back to the Homeland

Vesna KUKAVICA

(Matica magazine)

International migration can lead to significant social benefits for migrants and their families, and for their countries of origin and the receiving country if measures are implemented for better migrant flow management and to facilitate emigrant monetary transfers, says the annual World Bank report, which opens a challenging perspective for Croatia because our educated emigrants usually engage in two forms of monetary transfers to the homeland: investment into real estate and human resources.

Last year 150 million emigrants around the world made monetary remittances to their countries of origin to the tune of 301 billion dollars. This data was published recently by the World Bank and the Inter-American Development Bank, which operates within the UN's International Fund for Agricultural Development. These two influential institutions carried out independent research into how much monetary aid emigrants send to their countries of origin and how much these financial injections affect the development of the economy in these countries.

The studies, whose methodologies are only now in the 21st century being created and harmonised within the economic profession, encompass five dominant channels through which emigrant remittances are transferred: banks, non-bank monetary transfers, postal services, cash, transported goods and the well-known unofficial money transfer services.

Research assistance Adela Poprzenovic, with a little help from the Croatian Heritage Foundation, recently carried out a study of her own on remittances from Croatian emigrants to their country of origin at one of Sweden's oldest institutions, the Lund University, and estimates that the two most frequent types of remittance to Croatia from the emigrant communities are in investments into real estate and into human resources, whose effects on the distribution of earnings in Croatia deserves greater attention, as is recommended by the experts at the World Bank and the Inter-American Development Bank.

Croatian emigrants have traditionally strong links to their country of origin, which results in the frequent support of the household budgets of family and relatives and of the entire Croatian economy. The Office of Graduate Studies and Research (OGSR, 2006, pg. 144) has evaluated Croatia as among the top ten countries by received emigrant remittances per capita in 2002. In percentages the export of goods to this source of monetary transfer amounts to about 12%.

An overview of the flow of remittances from abroad in the period from 1997 to 2005 shows that Croatia is recording a stable inflow with a tendency to the growth of remitted emigrant funds every year and the outstanding fact that these remittances doubled during that period. The only exception is 1999 when a slight drop in remittances was recorded from the period preceding it as a result of the banking crisis of the time and the 1998 recession in Croatia, the effects of which were felt up to the end of 1999.

In the period from 1999 to 2002 Croatia recorded the greatest growth in the receipt of emigrant remittances.

The most likely reason for this was the economic recovery, while in 2002 the growth in remittances saw a significant slowdown from the previous period of growth, even though emigrant monetary transfers continue to show an upwards trend, as confirmed by the official reports issued by the Croatian National Bank (CNB) studied by economist Poprzenovic.

According to the CNB data, remittances from Croatian citizens employed in third countries are counted in millions of euro, from 512.4 (1997) to say, 928.2 (2004), or even 933.4 million euro (2005).

In line with this data the World Bank and the Inter-American Development Bank estimate that emigrants sent 1.4 billion dollars to Croatia in 2007, which is 3.3 percent of the gross domestic product. Neighbouring Bosnia & Herzegovina received 2.3 billion dollars from its Diaspora, which is a high 20 percent of our neighbour's GDP. The World Bank states that transfers that were registered by the central national banks amounted to 208 billion dollars, but underline that that a further 93 billion dollars that arrives through other channels should be added to that amount, including cash that emigrants bring themselves during vacations and visits to relatives in the homeland.

What has led the global community's centres of financial power to look into migrant pockets?

The calculation is clear and challenging. Financial analysts agree that the monetary transfers made by emigrants significantly exceed the total investments made into developing countries, which amounted to 167 billion dollars last year. They are also significantly greater than the 104 billions dollars of assistance that comes by way of development funds. And almost a third of the total amount of emigrant remittances (96 billion dollars) comes from the USA, and two thirds from Europe and Asia countries. These remittances in total represent over 10 percent of the gross domestic product.

World Bank experts warn that these kinds of savings in underdeveloped countries often end up under mattresses as the recipients do not have bank accounts, and the economic potential of foreign aid is thus reduced. In the case of Croatia, at least as far as the current wave of migration at the start of the third millennium is concerned, this is not the case, as it is made up for the most part by educated emigrants who are aware of the advantages and challenges of financial markets.