Immigrants tend to send money back home
As much as $2 billion sent out of Canada helps other economies, study finds
Canwest News Service
Published: Thursday, July 24, 2008
OTTAWA — Canadians send as much as $2 billion out of the country each year to friends and family in foreign countries, essentially pumping up overseas economies in a trend that one expert says is most likely not going to change.
In a study released Wednesday, Statistics Canada says remittances by new immigrants alone account for up to 30 per cent of the gross domestic products of some developing countries, including Haiti, Lesotho, and Jordan. In Jamaica, the Philippines and the Dominican Republic, these money transfers account for as much as 20 per cent of their respective economies.
And new arrivals from Southeast Asia and the Caribbean were more likely than any other groups of immigrants to send money back home to friends and family, according to the agency.
Statistics Canada reported more than half of the people who arrived from these two regions in 2000-2001 sent money back home within two to four years of landing.
Using a series of questionnaires and interviews involving a representative sample of 7,700 recent immigrants, the study found that 41 per cent of immigrants who came to Canada in 2000-2001 sent home remittances within four years of arriving.
The average amount of funds sent within six months to two years of arriving was $2,500, and $2,900 after two years.
Although there is no total figure on how much money is sent overseas by immigrants, Statistics Canada estimates that Canadians give an average of $1.5 billion to $2 billion to friends and family outside of the country each year.
A Toronto university economics professor said this “cash leakage” has little effect on the Canadian economy, which reportedly has a GDP of about $1.6 trillion.
“It's definitely a positive from a global social perspective because it's allowing people in these overseas countries to have food, clothing, shelter — things they wouldn't be able to get any other way,” York University professor Perry Sadorsky said Wednesday. “But from a Canadian perspective, it's money that is leaking out of the country that could be spent here.”
Consumer industries such as cellphone companies, car and electronic manufacturers and restaurants are the ones that suffer most when money is sent away. Sadorsky predicts that with the direction the global economy is going, this trend of financially supporting family overseas is not going to stop.
“Some of these countries are experiencing explosive inflation when it comes to food prices. People are using this money to buy basic food like rice, corn and flour,” he said.
“What these countries need is a massive economic overhaul because they're not functioning as well as they could be.”