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Spreading the wealth the global impact of sending money home

Author: Communications

Posted on May 13, 2013

Category: UNB Fredericton

More than four billion people in the world currently live on an income of less than two dollars a day.

This and the desire to lift poor people up the economic ladder has inspired Dr. Basu Sharma, a business professor at the University of New Brunswick, to spend a significant part of his career researching how foreign capital is impacting developing countries.

One of the important aspects of globalization has been migration from developing countries to developed countries, which has increased the amount of money that migrants send home to their families in developing nations.

Migrant remittance - the amount of money that migrants send home to their families in developing nations - is three times the amount that is sent through official foreign aid.  In 2009 $300 billion was sent to developing countries from family members living in first-world countries. That amount increased to $406 billion in 2012 and by 2015 it will be $500 billion.

Dr. Sharma says migrant remittances are quickly becoming the most important element of foreign capital in many developing countries.

"This type of foreign capital impacts economic development by way of its use in meeting such basic human needs as education, health, housing, and financing small business investment," said Dr. Sharma.

In one of his recent papers, Dr. Sharma reported that remittances inflows to the low and middle-income earners in developing countries are positively and significantly related to domestic credit provided by the banking sector, which in turn helps to create more entrepreneurial activity.

Until recently, Dr. Sharma has been examining three main components of foreign capital and the effects they have had on economic growth in developing countries. These are foreign direct investment, foreign loans and foreign aid/grants. In the past few years, he has been investigating migrant remittances, which has not been thoroughly studied until now.

Dr. Sharma says appreciating how remittances are an instrument for macro-economic stability is important for leaders in today's globalized business world.

"The work my colleagues and I are conducting will enhance our understanding of how foreign remittances are providing entrepreneurial opportunities by freeing potential entrepreneurs from having to borrow hard to get start-up funds from traditional financial institutions," said Dr. Sharma.

Dr. Sharma is part of the human resources management area of UNB's faculty of business administration and he teaches courses in labour relations, international human resources, negotiation, and conflict resolution. He has been collaborating with three other professors at UNB in his recent work, Drs. Gopalan Srinivasan, Francisco Arcelus, and Joseph Abekah. He has also been working with Professor Azmat Gani, formerly with the Australian National University and University of Fiji.

For more information, contact Liz Lemon-Mitchell.

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