Showing papers on "Purchasing power published in 2009"

Avoiding the Middle-Income Trap: Renovating Industrial Policy Formulation in Vietnam

Abstract: Vietnam's growth in the last one-and-half decades has been driven by the liberalization effect and large inflows of external purchasing power. Now that the processes of systemic transition and global integration have deepened, Vietnam needs to create internal value to continue to grow and avoid the "middle-income trap". The country has reached the point where growth towards higher income cannot be secured unless policy making is renovated significantly to activate the country's full potential. The vision of Industrialization and Modernization to be achieved by 2020 must be backed by realistic industrial strategies and concrete action plans, which are currently lacking. Stakeholder involvement in policy design, inter-ministerial coordination, clear directives from the top, and incentive structure for government officials must be improved. This in turn calls for radical changes in policy administration. A new style of leadership, a technocrat team directly serving the top leader, and strategic alliance with international partners are proposed as key entry points for the renovation of Vietnam's industrial policy formulation.

Distortions to Agricultural Incentives in Africa

Abstract: One of every two people in Sub-Saharan Africa survives on less than $1.25 a day. That proportion has changed little over the past three decades, unlike in Asia and elsewhere, so the region's share of global poverty has risen from one-tenth to almost one-third since 1980. About 70 percent of today's 400 million poor Africans live in rural areas and depend directly or indirectly on farming for their livelihoods. While that rural share was even higher in the past, it means policies affecting the incentives for farmers to produce and sell farm products remain a major influence on the extent of Africa's poverty. The case studies help address questions such as the following: where is there still a policy bias against agricultural production? To what extent are some farmers now being protected from import competition? What are the political economic forces behind the more-successful reformers, and how do they compare with those in less-successful countries where major distortions in agricultural incentives remain? How important have domestic political forces been in bringing about reform, as compared with international forces? What explains the cross commodity pattern of distortions within the agricultural sector of each country? What policy lessons and trade implications can be drawn from these differing experiences with a view to ensuring better growth-enhancing and poverty-reducing outcomes in the study's focus countries and in the region's other economies?

Income, wealth and financial fragility in Europe

Abstract: The article examines the distribution of income and wealth among the generation of Europeans aged 65 and over, using data drawn from the first wave of the Survey of Health, Ageing and Retirement in Europe (SHARE). It looks at how cross-country comparisons of income, wealth and debt are affected by differences in purchasing power, household size and taxation, and shows that some seemingly wide international differences appear less so when the proper adjustments are made. The article reveals wide differences in income, wealth and indebtedness of elderly households in Europe, and provides background information on social issues such as the adequacy of savings at retirement, and the financial fragility of the elderly.

The global financial crisis and its impact on microfinance

Abstract: Compared with other financial institutions, microfinance institutions (MFIs) have emerged relatively unscathed from the financial crises of the past few decades. During the currency crises in East Asia and the banking crises in Latin America in the 1990s, institutions serving poor customers generally performed better financially than mainstream banks. At that time the clients and micro-enterprises financed by MFIs were not integrated into local banking and currency markets. The effects of today's global crisis are likely to be more complex, deeper, and more difficult to predict than in the past. What is clear is that the medium and longer term effects of a worldwide recession are likely to be punishing for many poor people and the institutions that serve them. Anecdotal evidence from different markets suggests that as the consequences of the crisis ricochet around the globe-credit crunch, currency dislocations, job losses, and falling demand-MFIs are being impacted in very different ways. How institutions are affected will depend on factors such as the structure of an institution's liabilities, its financial state, and the economic health of its clients.

Global inequality recalculated: The effect of new 2005 PPP estimates on global inequality

Abstract: The results of new direct price level comparisons across 148 countries in 2005 have led to large revisions of purchasing power parity exchanges rates, particularly for China and India. The recalculation of international and global inequalities, using the new purchasing power parity rates, shows that inequalities are substantially higher than previously thought. Inequality between global citizens is estimated at 70 Gini points rather than 65 as before. The richest decile receives 57 percent of global income rather than 50 percent.

The Impact of Market Forces on Child Care Provision: Insights from the 2005 Child Care Act in the Netherlands

Abstract: This article examines the impact of the introduction of market forces on child care provision in the Netherlands. In January 2005, the Dutch government introduced the Child Care Act, replacing the former financing system, which had elements of both supply- and demand-financing, with a fully demand-financing system. As a result, the provision of child care is now driven by market forces. Using data on the geographical location of child care facilities, this article compares the factors affecting the provision of child care in the Netherlands before and after the introduction of the Child Care Act. The results suggest that after the regulatory reform the provision of child care has shifted towards wealthy urbanised areas, characterised by high demand and high purchasing power. This shift has largely benefited for-profit providers particularly active in these markets. In parallel, the results indicate an important drop in child care provision by non-profit organisations, most pronounced in less wealthy rural areas. These findings suggest that the introduction of demand-financing may have implications for the accessibility of child care.

Ownership effects of fractional reserve banking: an Islamic perspective

Abstract: Purpose – The purpose of this paper is to show that fractional reserve banking (FRB) has implications for the ownership structure of assets in the economy that violates the Islamic principles of ownership.Design/methodology/approach – This is a theoretical paper that looks into the works of Islamic scholars on the issue of ownership that are based on Qur'an principles and the traditions of the Prophet, and evaluates the FRB from that perspective.Findings – The conclusion of the paper is that money creation through FRB is creation of purchasing power out of nothing which brings about unjust ownership transfers of assets, from the economy to the bank effectively paid for by the whole economy through inflation. This transfer of ownership is not based on human effort by taking on legitimate risks and neither with the knowledge nor the consent of the initial owners. This violates the ownership principles in Islam and is tantamount to theft. It also has the elements of riba. Islamic governments should therefore...

A dynamic econometric model of agricultural wage determination in Bangladesh.

Abstract: Economists applied data from 1949-1950 and 1980-1981 to a new dynamic model to examine the dynamics of determinants of agricultural wages in Bangladesh particularly the effect of changes in relative prices of rice (the staple food) and productivity. Just a 20% rise in the price or rice was passed on in the agricultural wage rate within the current year. About 50% was passed on in the long run however. Therefore an increase in the price of rice reduced the rice purchasing power of agricultural wages in the short and long term. In fact the importance given to rice in the long run real wage rate was almost the same as the mean proportion of expenditure that an agricultural laborer in Bangladesh committed to rice and closely related food staples. Thus arise in the price of rice in comparison to other goods had limited effects on the long run real wage in terms of the bundle of goods typically consumed but very adverse effects in the short run placing a high burden on the rural poor. On the other hand the long run real wage rate fell considerably between the mid 1960s-early 1980s when overall agricultural productivity increased. The economists pointed out that this increased productivity may not have lowered long run real wage rates but instead mitigating factors may have contributed to this fall. For example population growth rising landlessness and insufficient economic growth in nonagricultural sectors resulted in a consistent growth in the labor supply. In conclusion this new dynamic model showed that Bangladesh cannot depend only on agricultural growth to reduce the poverty of farmers.

Cadrisme within a Post-Keynesian Model of Growth and Distribution

Abstract: The 1990s, especially in the United States, witnessed an unprecedented change in income distribution, with a large redistribution towards rentiers on the one hand, and towards the upper ranks of the managerial bureaucracy on the other hand, as became ever more obvious after the financial scandals affecting large corporations such as Enron and Worldcom This has also been accompanied by large capital gains that benefited top-file managers as well as shareholders Ordinary employees and workers, as a counterpart, have seen their real purchasing power stagnate Despite all this, and in contrast to the predictions of the canonical Kaleckian growth model, many countries achieved respectable growth rates of capital and output The purpose of the present paper is to explain this paradox and to provide a consistent post-Keynesian model of growth that would model the main features identified above, making a distinction between managerial labour, basically overhead labour, and workers, essentially direct labour – a

Integrated market-based allocation of resources within an enterprise

Abstract: Allocating acquired resources within a firm is disclosed The ability to list acquired resources of a firm on an internal marketplace is provided A purchasing power asset is divided among the prospective users of an acquired resource of the firm An intra-firm market enabling prospective users of an the acquired resource of the firm to attempt to obtain the acquired resource by offering to provide an offered amount of the purchasing power asset in exchange for receiving the acquired resource is provided

Youth Employment in Sierra Leone: Sustainable Livelihood Opportunities in a Post-Conflict Setting

Abstract: This study focuses on short- and medium-term solutions. It informs the government about the type of programs and policies that could improve the employability of young people, paying special attention to areas in which productivity can be rapidly improved. The report consists of six chapters. Chapter two profiles young people in Sierra Leone. Chapter three examines young people in the labor market, with a focus on the labor supply side of the equation (that is, the skills young people bring to the labor market). Chapter four turns to employers (the demand side of the labor market) to better understand why they do or do not employ young people. Chapter five reviews skill development programs to enhance employability of young people in Sierra Leone and other countries and presents policy options for improving worker skills (supply side) and employer interest (demand side). Chapter six summarizes the lessons from the analysis and concludes with policy and program recommendations.

Wealth, Income, And The Affordability Of Health Insurance

Abstract: There have been debates over how many uninsured people can afford insurance but refuse to purchase it. Examining the difference in asset holdings between the privately insured and the uninsured, we found that the difference in purchasing power is not fully revealed by income comparisons. Median income among the privately insured is 2.9 times that of the uninsured, but median wealth among those with private insurance is 23.2 times that of the uninsured. Our results suggest that assets are an important determinant of effective affordability, undermining the notion that many people are uninsured by choice.

Pensions, purchasing-power risk, inflation and indexation

Abstract: The rapid rise in inflation in 2006-07 has attracted attention – once again – both to how pensions systems should react to changes in prices, and to how they do so in practice. Although inflation is now falling as a result of lower commodity prices and weakening demand, this brings with it the risk of deflation – falling prices – which also raises questions as to how pension systems should react. Most OECD countries have a legislated commitment to indexation of pensions in payment. However, the empirical evidence in this paper shows that these rules have frequently been over-ridden. Furthermore, because indexation to price inflation rather than wage inflation is much more common – and wages can be expected to rise more rapidly than prices – the effect of following legislated indexation rules will be to reduce pensioner incomes compared with those of the working-age population. However, indexation to prices is less costly, allowing a larger initial pension than under earnings indexation for a given budget constraint. This paper sets out current, national indexation policies and historical data on how pensions have been adjusted in practice. It examines different indexation policies: to prices, earnings or a mix of the two; the choice of the price index and progressive indexation (where smaller pensions are increased more rapidly than larger).

The Quality of Money

Abstract: Much has been written about the quantity of money and its effects on money's purchasing power. However, changes in the quality of money have been widely neglected. This paper analyzes changes in the quality of money and its influence on the purchasing power of money. I. INTRODUCTION The economics profession has recently neglected the connections between the purchasing power and the quality of money. In order to cover this gap, I will analyze the quality of money and how its changes affect the purchasing power of money. I will argue that changes in the quality of money can be far more important for the value of money than changes in its quantity. This conclusion is in line with the subjectivist approach of the Austrian School. In fact, the quantity of money is an objective and measurable aggregate. The quantity theory of money is the heart of neoclassical monetary theory, but does not reconcile well with the Austrian approach. In contrast, the quality of money is a subjective concept and should stand at the center of a monetary theory based on human action. Money serves people in attaining their subjective ends more efficiently and it fulfills certain functions for people. The better these functions of money are fulfilled in the eyes of actors the higher they value money. The quality of money is, consequently, defined as the capacity of money, as perceived by actors, to fulfill its main functions, namely to serve as a medium of exchange, as a store of wealth, and as an accounting unit. Hence, the theory of the quality of money maintains that the demand for money does depend on the quality of money. In fact, the quality of money is one of the important factors, along with uncertainty, financial innovations (credit cards, ATM machines, MMMFs), frequency of payment, etc. that affect the reservation or cashbalance demand for money. The theory of the quality of money, thus, contrasts with a one-sided quantity theory of explaining the price level. I will first review the treatment of the quality and quantity of money by economists. I will then analyze different properties of money influencing money's quality and how they can change. In the process I focus on the function as a medium of exchange and as a store of value. I conclude with a summary of my findings. II. THE THEORY OF THE QUALITY OF MONEY IN HISTORY The theory of the quality of money, even though not under this label, has a long tradition. While many authors have discussed the factors influences the quality of money, no unifying consensus has ever been established. Juan de Mariana (1609) explains that the deterioration of the quality of gold coins must be considered an (unjust) tax. Sir William Petty ([1662] 1889) considers the deterioration of the quality of coins by the government a tax. Adam Smith (1776) speaks of the origin of money and important qualities like durability and divisibility. Jean Baptiste Say ([1802] 1855) states that a good money must be divisible, of the same quality, resistant to friction, sufficiently rare, and malleable. He also analyzes the adulteration of the quality of money in historical instances as in the case of Philip I of France. Nassau William Senior ([1850] 1853) and John Stuart Mill ([1848] 1965) are two classical authors who discuss qualities of commodities that made them suitable to become money. Carl Menger (1871) explains the emergence of money as a spontaneous market process in which commodities with specific qualities prevail. Thus, the treatment of the qualities of money had been widespread before the twentieth century as William Stanley Jevons's (1875, p. 30) passage states: Many recent writers, such as Huskisson, MacCulloch, James Mill, Garnier, Chevalier, and Walras, have satisfactorily described the qualities which should be possessed by the material of money. Earlier writers seem, however, to have understood the subject almost as well. Harris explained these qualities with remarkable clearness in his "Essay upon Money and Coins," published in 1757, a work which appeared before the "Wealth of Nations," yet gave an exposition of the principles of money which can hardly be improved at the present day. …

The Golden Constant: The English and American Experience 1560-2007

Abstract: Contents: About the New Edition by Jill Leyland Preface Previously Written by Roy Jastram Foreword to the New Edition by Pierre Lassonde Introduction Part I: The English Experience 1. The Price of Gold 2. Historical Fluctuations in the Price of Gold 3. Commodity Prices and the Construction of Index Numbers 4. The Purchasing Power of Gold 5. The Purchasing Power of Gold in Inflation and Deflation Part II: The American Experience 6. The Evolution of the Gold Standard and Historical Fluctuations in Gold Prices 7. The Purchasing Power of Gold 8. Reflections on the Golden Constant Part III: After the Gold Price was Freed, 1971 to 2007 9. The Gold Market and the Purchasing Power of Gold 1971 to 2007 10. Further Explorations into the Gold Price and its Purchasing Power Appendices Index

Senior Customers' Service Encounter Preferences

Abstract: Growing segment size and increasing affluence have resulted in a substantial increase in the purchasing power of the senior market Seniors spend a higher proportion of their total expenditure on s

Food Security in Thailand: Status, Rural Poor Vulnerability, and Some Policy Options

Abstract: Agricultural development policy in Thailand over the past few decades has been importantly concerned not only with the country’s food security, but also with its export earnings. Thailand is a food surplus country at the macro level. In terms of food accessibility, however, especially at the household level, it remains a problem, particularly in the rural remote areas. A recent increase in food price and production cost has inevitably impacted on Thailand’s rural poor. With a declining purchasing power, these poor households face the risk of food insecurity as they may reduce the food intake of more nutritious food. The impact of rising food prices on agricultural households depends on whether they are net buyers of food. In the case of rice farming households, the share of net buyers was higher for households with smaller land holdings. Also, the poor rice farmers in Thailand were hardly hit by the higher production cost and input prices since their net profit largely declined. It is found that while nearly two-thirds of their operating cost was paid, they only received one-tenth from the rice sold . For overcoming future impacts of high food price and rising production cost on rural poor, a provision of off-farm employment and micro-credit facilities with technical assistance and proper farm management plans should be targeted to small farmers and the rural poor. In the longer-run, it is suggested that empowering small-scale farmer capacity building based on sufficiency economy concepts is necessary for further development. This can work if it is coupled with farm productivity enhancement through agricultural research investment and improvement of village-pool water resources including on-farm water resource management and investment.

On the Societal Benefits of Illiquid Bonds

Abstract: Kocherlakota (2003) presents an example of a monetary economy where efficiency is enhanced with the introduction of a nominally risk-free bond that is specifically designed to be illiquid. In his environment, an asset market involving swaps of money for bonds effects a socially desirable redistribution of purchasing power that might otherwise be replicated by a policy of type-contingent money transfers. In this paper, I recast Kocherlakota’s model in a fully dynamic quasilinear model and characterize optimal interventions when type-contingent transfers are feasible and when they are not. When they are not, an illiquid bond is essential. However, I also find that an illiquid bond may remain essential even when type-contingent transfers are feasible.

Significance and development problems of SME's in contemporary market economy

Abstract: Small and medium enterprises (SMEs) represent the basis of economic development. Because of their characteristics, SMEs are far more flexible and responsive to frequent changes that occur in the contemporary global environment than large enterprises. This paper analyses significance of SMEs to the economies of EU and Serbia. The result is great significance due to the fact that more than 95% of all registered enterprises are SMEs. The paper also analyses the most frequent problems of SMEs in the EU and Serbian market. The results show that these problems are usually generic and that the most important ones are: lack of financial assets, small possibility of technology transfer, lack of capacity for permanent development of products and services, small possibility of internationalization of business operations, lack of quality management, inadequate administrative regulations, limited purchasing power, etc.

Some Simple Observations on the Reform of the International Monetary System

Abstract: The demand for reform of the financial system has focused on the dollar's loss of international purchasing power (the Triffin dilemma) and its substitution by an international reserve currency that is not a national currency. The problem, however, is not the particular asset that serves as the international currency but rather the operation of the adjustment mechanism for dealing with global imbalances. In a preliminary report issued in May, the Commission of Experts of the President of the United Nations General Assembly on Reforms of the International Monetary and Financial System made clear that the international system suffers from an inherent tendency toward deficient aggregate demand, a reflection of the asymmetry in the international adjustment mechanism. Even the simple creation of a notional currency to be used in a clearing union (proposed by Keynes) cannot do this without some commitment to coordinated symmetric adjustment by both surplus and deficit countries. Thus, the first steps in the reform process must be (1) to offset the balance sheet losses caused by the collapse of asset values and (2) to provide an alternative source of demand to replace the U.S. consumer and an alternative source of finance to offset the deleveraging of financial institutions. This can be done through the coordinated introduction of traditional, countercyclical deficit expenditure policies, on a global scale.

Towards a Sustainable Cocoa Chain: Power and possibilities within the cocoa and chocolate sector

Abstract: This report contributes in various ways to the debate on a sustainable cocoa economy. A sustainable cocoa economy is where each person investing time or money into the supply chain would be able to earn a decent income for themselves and their family, work in good conditions, and in a manner which did not harm the environment. It provides an overview of the various stakeholders in the cocoa and the wider chocolate supply chain. It identifies the concentration and purchasing power of companies as well as the trends in the supply chain. Finally, it makes a series of recommendations to the various stakeholders in the supply chain.

For-profit organisations in managed markets for human services

Abstract: Th e provision of human services, including paid care, relies substantially on government funding. Increasingly over the last 25 years, in Australia and elsewhere, that funding has been distributed using ‘competitive’ market mechanisms. Th e result has been a widespread development of managed markets, also known as ‘quasi-markets’, in human services. Th ere are many variants of managed markets, but they are all distinguished from conventional markets1 primarily by the fact that government is the source of much, if not all, of the purchasing power of the users of services. Th is enables government to dictate how these markets operate in ways that go well beyond the powers of government in most conventional markets. In turn, government action in shaping the particular form of each managed market will substantially infl uence the types of service provider organisations that operate in that market, including the extent to which for-profi t organisations (FPOs) are present. Th is chapter reviews some key characteristics of human services, managed markets, and FPOs, as a basis for examining the type of service providers that should and do operate in these markets, particularly in terms of the growing role of FPOs. Th is analysis can assist in establishing whether there may be justifi cation for limiting or encouraging the participation of some types of providers in these

Purchasing Power of Labour: Norwegian Real Wages, 1726–2006

Abstract: By utilizing data from one of the largest international historical archives on wages and prices, this article offers new nominal and real wage series for Norway, 1726–2006. These serve as measures for the purchasing power of labour as input to production. The new series cover all main industries and thereby enables solid conclusions. The new series challenge existing views on the development of the purchasing power of labour in Norway during the last three centuries.

Time Diversification and Horizon-Based Asset Allocations

Abstract: Time diversification, the concept that investments in stocks are less risky over longer periods than shorter ones, has been the subject of spirited debate for decades. Over the last few years the growing acceptance of life cycle investment products, such as target retirement mutual funds, has renewed interest in this topic. The objective of this article is not to prove or disprove time diversification, but to evaluate whether the concept must be valid for a horizon-based asset allocation framework to be viable and appropriate. Our findings suggest that there is little evidence to support the notion that time moderates the perceived volatility inherent in risky assets. However, we would expect the risk/reward relationships of the past to prevail in the future, and if that is the case, a longer investment horizon may support a willingness and ability to assume the greater uncertainty of equity-centric asset allocations. This may be true particularly for younger investors for whom the allocation to human capital and the risk posed by the erosion of purchasing power by inflation can reasonably be assumed to be greatest.

Food Security in Thailand: Status, Rural Poor Vulnerability, and Some Policy Options

Abstract: Agricultural development policy in Thailand over the past few decades has been geared not only to the nation’s food security, but also to export earnings. Thailand is a food surplus country at the macro level but food accessibility at the household level remains a problem, particularly in remote rural areas. The recent increase in food price and production cost has impacted on the rural poor. With a declining purchasing power, the poor households face the risk of food insecurity as they may reduce their intake of more nutritious food. The impact of rising food prices on agricultural households depends on whether they are net buyers of food commodities whose prices have increased. In rice farming households, the share of net buyer households was higher among households with smaller land holding. Also, the poor rice farmers in Thailand were severely affected by the higher production cost and input prices since the reduction in their net profits was larger. While nearly two-thirds of their operating cost was cash expense, they received only one-tenth from the rice sold. In order for the rural poor to cope with future impacts of high food price and rising production cost, a provision of off-farm employment and micro-credit with technical assistance and proper farm management plans should be targeted to small farmers and rural poor. In the longer-run, it is suggested that small-scale farmer capacity building and empowerment based on the sufficiency economy concept is necessary. This should be complemented by enhancing farm productivity through agricultural research and improvement in village-pool water resources including on-farm water resource management and investment.

Marketing to the bottom of the pyramid: opportunities in emerging markets.

Abstract: The significance of emerging economies to global marketing within the context of a paradigm shift of international business is enormous. The purpose of this paper is to show that emerging markets have two separate areas of opportunity for multinational corporations: to buy and to sell. The paper first involves a discussion of economic growth in emerging markets, and the importance to the global marketplace, and the emergence of the bottom of the pyramid (BOP) market. Then, recent strategies by companies to address this potential are analysed. Emerging markets do not consist of one market. They are diverse and can require separate market entry and market development strategies. With more manageable risks, ease of communications and transportation, higher income growth and increasing consumer purchasing power, there are both low cost, high quality resources to buy from and new opportunities for multinational corporations to sell to, at the BOP. The paper suggests that managers address both high-end developed markets as well as low-end emerging markets. The paper reviews many key concepts involved with managing profitable BOP market growth related to operating in emerging markets. It analyses strategies to satisfy consumer needs globally by both entering emerging markets and sourcing from them.

Three difficulties with neo-chartalism

Abstract: Neo-chartalists have made three assertions that deserve qualification: (1) money has value because the state accepts it for the payment of taxes, (2) the state has the ability to determine its value, and (3) private bank money can be understood as a "leverage" of fiat money. Conversely, we believe that money is accepted in the last instance because it is useful for cancelling bank debt; the power of the state to determine its purchasing power is limited, and bank deposits are not a leverage of fiat money. These criticisms do not challenge the validity of the whole approach but aim to make it clearer.

Economic Crisis and the Decline of Remittances to Mexico

Abstract: In this era of globalization and strong migratory flows what happens in the United States and other core capitalist countries has repercussions on the developing world. Anthropologists working in both migrant-sending communities in Latin America and in migrant-receiving communities in the United States currently have the opportunity to map how economic downturn in the receiving country affects migrant families and communities in the sending country, thus showing how the local is affected by the global, an important theoretical (as well as humanitarian) concern in anthropology.1 Applied anthropologists working in both the United States and abroad may be able to play a role in helping unemployed immigrants, whether staying in the United States or returning to their home communities, to generate or access alternative sources of income. Recently much attention has been paid to the present and predicted decline of remittances in Latin America and the Caribbean. Slowdowns in remittances have been registered in Mexico, Brazil, El Salvador and Guatemala (Lazo, 2008: 1). The effects of these slowdowns in remittances will be widespread in the migrant-sending countries. It is estimated that "El Salvador receives about 18 percent of its gross domestic product from money abroad and Guatemala about 12 percent" according to the Inter- American Development Bank (Lazo 2008: 1).2 The World Bank also notes a slowdown in remittances since the third quarter of of 2008, a situation expected to "deepen" in 2009 due to what has now become a global financial crisis (Ratha, Mohapadra, and Xu 2008:1). The World Bank expects the flow of remittances worldwide to decline by between 0.9 and 6 percent in 2009. Regional differences exist, however. Remittances from the United States to Latin America and the Caribbean slowed most between 2007 and 2008, showing a zero percent increase; but remittances from all sources to the Middle-East and North Africa increased by 8 percent in the same time period (Ratha, Moapadra, and Xu 2008: Table 1, p.2). Even in countries where absolute amounts of remittances remain stable, the value of dollar remittances has fallen. The Inter-American Development Bank reports that in 2008 remittances to Latin America will fall by a value equivalent to 150 billion dollars, or by 1.7 percent, the first fall since the Bank began keeping track in 2000. The Bank attributes this decline in remittances to four causes: 1) inflation in the immigrant receiving and sending countries; 2) recession in the United States and Spain which prevents access to better paying jobs; 3) the anti-immigrant climate in receiving countries; and 4) the fall in the value of the dollar compared to currencies in a number of Latin American countries, thus lessening its purchasing power (Cardoso 2008: 1). The Bank holds that the situation is particularly difficult in Mexico where 57 percent of remittances are used to cover basic needs like clothing, food, and housing. The other 43 percent is invested in savings, small businesses, property, and education (Cardoso 2008: 1). While Mexican authorities predicted an 8 percent decline in remittances over the course of 2008, the World Bank predicted only a 4.4 percent decrease (Ratha, Mohapadra, and Xu 2008: 4). Even this decline will have a great impact on the Mexican economy, however, since after oil exports, remittances are the highest source of foreign exchange (Wilkinson 2008:1; Gonzalez Amador 2008: 1). It was reported in September 2008 in La Jornada, a widely read Mexican newspaper, that the head of the national tax office (Secretaria de Hacienda y Credito Publico) estimated that due to the downturn in the U.S. economy there would be 2.5 billion dollars less in remittances in 2008 than there were in 2007. The head of the tax office sustained that approximately 10 million Mexicans are working in the United States and that their remittances, amounting to approximately $25 billion annually, help to reduce poverty and increase consumption in Mexico (Gonzalez Amador 2008: 1). …