Tuesday, July 31, 2007

One Day Out (Justin)

Today we were supposed to go to Six Flags with family to relax and celebrate our last day here. Instead, Joni and I got really sick last night with a stomach bug that's been going around. So, please pray that it passes quickly! We fly out tomorrow (Wednesday) evening around 6pm.

However, while at home I found the following blog post ,written by Moldovans, that illustrates the costs of mass immigration from Moldova on Moldova itself. The post states that remittances from Moldovans abroad account for 27% of Moldova's GDP. The share of money spent from abroad has increased from 8% in 1999 to 27% in 2006.

This increase in consumption using foreign money is helping drive the bad inflation that we see in the country. Moldovans working in the country are receiving wages that don't change often, whereas those receiving remittances from their cousins working in Germany, for example, are able to buy more and more goods, which drives up prices and hurts Moldovans who don't leave for Germany.

The author, however, proposes a solution that historically has proven weak: the government can intervene by providing more grants and scholarships to keep educated people from leaving.
1. These grants will pale in comparison to what an educated person can earn abroad.
2. The increase in government spending will further widen the deficit, and in turn the external debt of the country to pay for them (unless accompanied by an increase in taxes, which would have obvious consequences).

I'm glad to be working on what I feel is the solution: bottom-up microenterprise development. The best thing the government could do is liberalize laws to allow businesses to start faster, with less red tape. They could find some ways (more legal and moral than anything) to encourage international agencies to enter and start helping entrepreneurs create jobs on their own.

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