Remittances are transfers of money by migrants or migrant workers to their home countries.
Scale of remittances[edit | edit source]
While worker remittances to developing countries can only be estimated, experts believe that the total value of remittances is considerably larger than official development assistance and is sometimes more important to developing economies. The World Bank estimates that 93 billion in remittances flowed to developing countries in 2003 and that such remittances could grow to $200 billion by 2020.
Estimates of the value of such remittances vary, but even the lowest figure for 2004 -- $30 billion, reported by the Bureau of Economic Analysis (BEA) -- is an amount 1.5 times larger than U.S. government foreign aid for 2004. (See related article.) The informal channels (including person-to-person transfer, people traveling with cash on their own behalf or for other people) are very significant and extremely difficult to estimate.
Other estimates are much higher still. The total for the Philippines (estimated by the IMF has been revised upwards by a factor of 50, from $125 million to $6 billion:
- The big change came in 2002-3, when - according to World Bank senior economist Dilip Ratha - a re-examination of how the flow of money from migrant workers was calculated showed that differences in definition from country to country were keeping much of the funds out of the headline numbers.
Fees[edit | edit source]
Fees associated with sending remittances are high. Informal service providers are often used to avoid the high fees of bank transfers; however, remittance service providers have been affected by regulations intended to block money laundering and the financing of terrorism.
Notes[edit | edit source]
- The Nations Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families defines migrant worker as follows: "The term "migrant worker" refers to a person who is engaged or has been engaged in a remunerated activity in a State of which he or she is not a national."
- Fact Sheet: U.S. Development Assistance, 12 April 2005 (public domain.
- [http://web.archive.org/web/20080518195933/https://usinfo.state.gov/gi/Archive/2006/Apr/25-716622.html U.S. Immigrants Fuel Local Economies in Their Home Countries - US Department of State, Elizabeth Kelleher, 24 Apr 2006 (public domain)
- The remittance lifeline, BBC NEWS, 18 March, 2004
- In the US fees average 12.5 percent, or $4 billion annually, and the government has pledged to reduce this. It is claimed that the U.S.-Mexico Partnership for Prosperity has reduced the cost of sending remittances to Mexico by 58%.