Remittances - A Glance on Its Impact
Remittance refers to a money send or transfer by migrants to their home country primarily to support families back home. There are various methods in which a migrant transfer money. The common methods have been through banks, credit institutions or money transfer companies.
For many years the impact of remittances has often been overlooked and even uncounted. As the scale of migrants have increased significantly in the past few years, the impact of remittances is recognised in all developing countries of the world, which constitutes an important flow of foreign currency. Remittance is in fact the second largest financial inflow to many developing countries. Remittances are considered a vital medium of financial support that directly influences the income of migrants' families. It also directly contributes to household income, allowing better standard of living and enables higher investment in business.
As per the World Bank's latest Migration and Remittances Factbook 2011 report the remittance flows are expected to reach $440 billion by the end of 2011. The growth in the expatriate population in the high-income countries like United States, Russia, Germany, Saudi Arabia, and Canada remain the main source of remittances, migration in these countries in the recent years have increased significantly.
According to the Factbook 2011 report, the top immigration countries relative to population are Qatar followed by Monaco, the United Arab Emirates, Kuwait and Andorra. As per the World Bank report, remittances to developing countries will rise further in 2011 and 2012, possibly exceeding $370 billion in two years' time.
According to the World Bank facts and figures the inflow of income via remittances brings financial stability for middle to low-income households as the money is used primarily to cover the daily expenses. The current economic studies have also claimed that the spending on consumption generates lasting economic development. The increase in household expenditures via remittance can have a direct and positive effect in the economy of a country as it can boost the ongoing demand for consumer goods and services, which, in turn, triggers production and results in the creation of new jobs. This theory has already been supported by economic analysis which shows that remittance can act as a catalyst to reduce the level and severity of poverty. The theory also supports the fact that increases in spending have a multiplier effect.
The inflow of money through international migrants not only fill the coffers of private households but it also reduces the foreign exchange deficiency of a country, hence strengthen the financial condition of the country in the way. Whether in the long run it is an effective means to improve economic growth or can be reckoned as future solution on combating poverty is another question which still needs to be look at. But as long as remittance flows continue it will continue to benefit the life of people receiving the remittance.
For many years the impact of remittances has often been overlooked and even uncounted. As the scale of migrants have increased significantly in the past few years, the impact of remittances is recognised in all developing countries of the world, which constitutes an important flow of foreign currency. Remittance is in fact the second largest financial inflow to many developing countries. Remittances are considered a vital medium of financial support that directly influences the income of migrants' families. It also directly contributes to household income, allowing better standard of living and enables higher investment in business.
As per the World Bank's latest Migration and Remittances Factbook 2011 report the remittance flows are expected to reach $440 billion by the end of 2011. The growth in the expatriate population in the high-income countries like United States, Russia, Germany, Saudi Arabia, and Canada remain the main source of remittances, migration in these countries in the recent years have increased significantly.
According to the Factbook 2011 report, the top immigration countries relative to population are Qatar followed by Monaco, the United Arab Emirates, Kuwait and Andorra. As per the World Bank report, remittances to developing countries will rise further in 2011 and 2012, possibly exceeding $370 billion in two years' time.
According to the World Bank facts and figures the inflow of income via remittances brings financial stability for middle to low-income households as the money is used primarily to cover the daily expenses. The current economic studies have also claimed that the spending on consumption generates lasting economic development. The increase in household expenditures via remittance can have a direct and positive effect in the economy of a country as it can boost the ongoing demand for consumer goods and services, which, in turn, triggers production and results in the creation of new jobs. This theory has already been supported by economic analysis which shows that remittance can act as a catalyst to reduce the level and severity of poverty. The theory also supports the fact that increases in spending have a multiplier effect.
The inflow of money through international migrants not only fill the coffers of private households but it also reduces the foreign exchange deficiency of a country, hence strengthen the financial condition of the country in the way. Whether in the long run it is an effective means to improve economic growth or can be reckoned as future solution on combating poverty is another question which still needs to be look at. But as long as remittance flows continue it will continue to benefit the life of people receiving the remittance.
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