Critics of globalization argue that even if it might benefit developing countries in the long run, it exacerbates poverty and generates economic instability in the short run. But the raging debate over globalization often overlooks an increasingly important feature that makes life better and more stable for millions who live in poor countries right now: Migrants who send money home.

New analyses based on data from families in developing countries that receive money from relatives working abroad directly demonstrates that at least one element of globalization — migration — increases economic stability in poor countries.

Migrants from struggling countries in Latin American, Southeast Asia, and other regions are increasingly securing jobs with salaries that, while low by rich country standards, are far higher than they could dream of earning at home, and are sending the money back to their families. In 2001, workers from poor countries sent home more than $46 billion — a staggering figure that exceeds the official foreign aid delivered to those countries that year by $5 billion, and is more than double the amount of a decade earlier.

The cash that workers send home to countries such as Colombia, Haiti, Jamaica, Mexico, and Bangladesh acts as a safety net that governments in developing nations typically cannot provide.  That is, in addition to providing their families at home with a much-needed source of stable income, migrants working abroad provide insurance by sending home even more money to help during crises.

These so-called “remittances” enabled thousands of Jamaicans, for instance, to recover from the devastation of Hurricane Gilbert in 1988 when storm damage was estimated at more than one-quarter of GDP, and nearly three in four of all households in the tiny Caribbean nation reported damage.  Insurance was scarce and the government offered only limited help after Gilbert, providing only a fraction of the aid that its citizens actually needed.  Instead, Jamaican families got far more help from loved ones living and working abroad, in places such as Miami, New York and Los Angeles.

The same was true when the economy tanked last year in Argentina, when violence wracked Haiti, when a hurricane ravaged Honduras, and when floods have routinely submerged countless villages in Bangladesh. Billions of dollars in “remittances” from migrants gave their family what their governments could not always provide: food, safety, resources for recovery, and hope.

The fact is, poor nations often cannot offer the kind of economic stability, insurance and emergency assistance that citizens of the United States and other wealthy nations have come to expect from their governments and private insurance markets. However, in developing countries, remittances may be the best insurance around. Hurricane Gilbert--and the extent to which Jamaicans rely on family money from abroad--proves it.

In Jamaica, remittances make up more than 10 percent of the GDP and are more than double the level of foreign direct investment. After Gilbert, remittances increased by 25 cents for each dollar of hurricane damage, suggesting that the family money acts as a form of insurance, according to data from the Jamaica Survey of Living Conditions (JSLC), an extensive and large-scale household survey conducted annually since the 1980s.

True, the extra money sent home provided only partial insurance. Perhaps migrants worry--just like actual insurance companies--that too much help would result in recipients doing less to protect themselves and earn a living at home. Or, maybe the damage from the hurricane was simply too large to cover completely. After all, migrant workers may be relatively well off by standards at home, but they struggle to earn a decent living in their host countries. Either way, migrants dug deeper into their pockets to help out back home after Gilbert, increasing their already generous contributions to offset losses back home.

The importance of this money to families in poor countries teaches two lessons. First, it should be easy and inexpensive for migrants to send money home. Today, they often pay ten percent or more of what they send home in fees to financial institutions. Reducing those fees would, in effect, be a tax cut for the poorest. 

Second, and perhaps more importantly, we should embrace migration as an effective and immediate way to bring relief and stability to poor nations far faster than many government programs can.

Scott Wallsten is a Fellow at the AEI-Brookings Joint Center for Regulatory Studies.