There is a specific type of aid from developed economies to developing economies, which dwarfs the official flow of aid in the world, more than tripling the figures. It benefits the economies and businesses in the countries it comes from, as much as it benefits those in receiver countries. It is worth HALF A TRILLION dollars a year. It’s advertised on signs at many local shops, banks and supermarkets. It is one of the most important sources of economic globalisation in existence, linking businesses, large and small, in the UK and elsewhere with stakeholders across the world… And almost none of the readers of this blog will be able to name it.
The sad news is that this source of widespread benefit, aiding businesses in the developed world and those in desperate need in the developing world alike, is in danger of drying up before we can acknowledge the scale of its importance.
So, what is the secret?
It is expatriate home wage remittances. Or, to put it more simply, migrants sending some, or all, of the money they earn home to help their families. The Pew Research Group put the total of these transfers at approximately $574 billion in 2016, the last year for which data is available. This huge flow of money has a uniquely positive role in tying economies, countries and businesses together. As many people know, it’s not just size that counts either, the fact that the money reflects deeper emotional links among families and friends is very important in this world of global business.
Why is it important to business?
It may not be a top consideration for a small or medium enterprise, in fact it may be a simple coincidence that causes immigrants from one country or another to end up working for one business or another. But when these businesses grow and internationalise, the links that their employees have with home can be invaluable, if leveraged properly. When the business that has been the lifeblood of a family comes to that family’s local area, that business is going to be remembered and viewed as a profound influence. Referrals from company employees in developed countries can lead to a strong, devoted workforce across the world and the appreciation of families in receiver countries can lead to an equally devoted customer base. This is an invaluable and often overlooked driver for businesses as they develop and go international. It is one which has helped the likes of everyone from Silicon Valley tech start-ups to FMCG distributers, and unfortunately it is beginning to dry up.
Why is it drying up?
It is well known that immigration to the UK is falling and that immigrants living in Britain are returning home after a long period of national antipathy. Feelings about this workforce exodus are mixed among businesses, and, so they should be, as it reduces the global impact of British businesses as detailed above. This is only one part of a global story, as Trump looks to build walls, remove protections on many immigrants and make it harder to send money home.
It seemed worth emphasising this brilliant, beneficial global link before it began to disappear completely.