Workers' Remittances: An Important and Stable Source of External Development Finance

An analysis of trends in workers' remittances and their impact on economic growth
Download 19 pages

This paper examines the relative importance of workers' remittances as a source of development finance, and discusses measures that industrial and developing countries could take to increasing remittances. The main topics that the paper discusses are:

  • Remittances are the second-largest source of external funding for developing countries;
  • Improvements in policies and relaxation of foreign exchange controls may have encouraged the use of remittances for investment;
  • By strengthening financial-sector infrastructure and facilitating international travel, countries could increase remittance flows, thereby bringing more funds into formal channels;
  • Facilitating international labor mobility is a crucial means of increasing remittance flows to developing countries.

The paper:

  • Analyzes trends and cycles in workers' remittances in developing countries and compares them to other sources of foreign exchange earnings, such as exports, private capital and official flows;
  • Examines the impact of remittances on growth, investment and income distribution in recipient economies;
  • Discusses means of strengthening the infrastructure for sending remittances;
  • Deals with international migration - the precondition for remittances.

The paper also includes information about:

  • The role of Mexican consulates in boosting remittances;
  • Financial fairs that promote remittances and good banking habits among migrants;
  • The increasing pressure of world migration.

The paper concludes by outlining the near- and long-term viewpoint for remittances to, and migration from, developing countries.

About this Publication

By Ratha, D.