Migrants’ Transfers and the Balance of Payments

Transfers of money across national boundaries by migrant workers appears in both the current and capital account of the balance of payments.

For the world as a whole in 2010:

Stock of immigrants: 215.8 million or 3.2 percent of population
Females as percentage of immigrants: 48.4 percent
Refugees: 16.3 million or 7.6 percent of the total immigrants

Top 10 remittance recipients in 2010 (billions): India ($55.0 bn), China ($51.0 bn), Mexico ($22.6 bn), Philippines ($21.3 bn), France ($15.9 bn), Germany ($11.6 bn), Bangladesh ($11.1 bn), Belgium ($10.4 bn), Spain ($10.2 bn), Nigeria ($10.0 bn)

Top 10 remittance recipients in 2009 (percentage of GDP): Tajikistan (35.1 percent), Tonga (27.7 percent), Lesotho (24.8 percent), Moldova (23.1 percent), Nepal (22.9 percent), Lebanon (22.4 percent), Samoa (22.3 percent), Honduras (19.3 percent), Guyana (17.3 percent), El Salvador (15.7 percent)

(source: World Bank)

International transfers of money by private individuals such as workers’ remittances appears in the current account of the balance of payments. For example a portion of a migrant worker’s monthly wage that might be sent back to their family living in another country.

Migrants’ capital transfers are not transactions between two parties (for example the migrant worker and his/her family) but other transfers of money that can arise from the migration of individuals from one economy to another, for example money that accumulates in bank accounts or returns from portfolio investments (perhaps the profit from the sale of a property) that is sent remitted home.

Internationally, after inward foreign direct investment, migrants’ capital transfers are now the second largest source of capital inflows to emerging markets and developing countries and they provide an increasingly important means of helping to fund the current account deficits of economies with balance of payments problems.

Balance of payments data on remittances very likely underestimates the true amount of worker remittances from one country to another be it those that appear on the current account and those that find their way into the capital account.

For more background on this - try this resource from the World Bank

Unit 2 Macro: Cyclical and Structural Economic Issues Facing the UK [23 May 2012]
Unit 2 Macro: Migration and the UK Economy [20 May 2012]
Unit 2 Macro: Positive and Negative Multiplier Effects [20 May 2012]
Unit 2 Macro: The Importance of Productivity [20 May 2012]
Unit 2 Macro: Human Development Index (HDI) [20 May 2012]
Q&A: What do we need to know about output gaps? [20 May 2012]
Unit 2 Macro: The Output Gap [20 May 2012]
Revision notes on unemployment [20 May 2012]
Unit 2 Macro: Bank Cuts UK growth Forecast for 2012 [16 May 2012]
Unit 1 Micro: Economics of a Minimum Wage [12 May 2012]
Unit 2 Macro: Revision Notes on Supply-side Policies [10 May 2012]
Unit 3 Micro: The Dawn of a Shareholder Spring? [8 May 2012]
Unit 2 Macro: Growth and Development Glossary [5 May 2012]
Unit 2 Macro: Trade and Balance of Payments Glossary [5 May 2012]
Unit 2 Macro: Fiscal Policy Glossary [5 May 2012]
Unit 2 Macro: Economic Cycle Glossary [5 May 2012]
Unit 2 Macro: Aggregate Demand Glossary [5 May 2012]
Macro Revision - Key Statistics on the UK Economy [4 May 2012]
Macro Revision: Putting Things in Context [29 Apr 2012]
Unit 2 Macro: Britain back in Recession [29 Apr 2012]
Unit 1 Micro: Adecco and Monopsony Power [22 Apr 2012]
Unit 4 Macro: Managing the Global Commons - Limits to GDP [15 Apr 2012]
Unit 2 Macro: The UK Balance of Payments in 2011 [4 Apr 2012]
Unit 4 Macro: Productivity Improvements in China [3 Apr 2012]
Unit 2 Macro: Revision on Real Economic Data [2 Apr 2012]
Unit 2 Macro: Gross National Happiness in Bhutan [31 Mar 2012]
Posen on slower growth in the UK compared to the USA [30 Mar 2012]
Global Economy- the 2012 BRICS Summit [28 Mar 2012]
Life in the Slow Lane - UK Growth in 2011 Lags the Euro Area [28 Mar 2012]
George Buckley at the Millfield Economics Society [28 Mar 2012]
Unit 1 Micro: The Tax on Beer [16 Mar 2012]
Unit 1 Micro: Highest and Lowest Paid Jobs in the UK [26 Feb 2012]
Unit 3 Micro: Low Pay in Supermarkets [24 Feb 2012]
Unit 2 Macro: The Dash for Gas in Mozambique [17 Feb 2012]
Unit 1 Micro: Public Goods [11 Feb 2012]
Unit 4 Macro: Focus on India - Comparative Advantage [27 Jan 2012]
Unit 2 Macro: Focus on China - Trade and Growth [27 Jan 2012]
Unit 2 Macro: Focus on China - Carbon Emissions and Growth [26 Jan 2012]
Unit 2 Macro: Focus on China - Per Capita Incomes [26 Jan 2012]
Unit 2 Macro: Focus on China - Changing Economic Structure [26 Jan 2012]
Unit 1 Micro: Can the UK Computer Games Industry Grow [24 Jan 2012]
Unit 4 Macro: Focus on India - Economic Growth [24 Jan 2012]
France and Flexible Employment [22 Jan 2012]
Unit1 Micro: Can a minimum wage create jobs? [16 Jan 2012]
Beyond the Bike - The Importance of Remittances [15 Jan 2012]
Economics at the Movies - Freakonomics [9 Jan 2012]
Unit 2 Macro: Brazil Overtakes UK in Economic Size [26 Dec 2011]
Unit 4 Macro: Prospects for the African Economy [21 Dec 2011]
Millennium Development Goals - Uneven Progress [18 Dec 2011]
Behavioural Economics: Herd Behaviour [28 Nov 2011]
Where is the UK Economy? National Output [22 Nov 2011]
AS Macro: The State of British Business [13 Nov 2011]
Unit 3 Micro: Time of Use Pricing for Energy [2 Nov 2011]
AS and A2 Macro: GDP resources from Planet Money [31 Oct 2011]
Unit 4 Macro: Should TNCs make full disclosure on factory wages? [30 Oct 2011]
Unit 3 Micro: UK Executive Pay - All in it Together? [29 Oct 2011]
Unit 3 Micro: Drop Box and Freemium [18 Oct 2011]
Unit 4 Macro: World Food Day [16 Oct 2011]
Can the “invisible hand” solve Africa’s poverty? [13 Oct 2011]
Keynes Prize: The Economics of Cities (2) [13 Oct 2011]
Keynes Prize: The Economics of Cities (1) [12 Oct 2011]
Unit 4 Macro: Unit Labour Costs and Inflation [12 Oct 2011]
Unit 2 Macro: UK suffers a weak recovery [12 Oct 2011]
Unit 3 Micro: Monospony Power and Low Wages in Care Homes [3 Oct 2011]
Unit 3 Micro: Tube Drivers set to earn £50,000 a year [3 Oct 2011]
NMW: Classical real-wage unemployment [3 Oct 2011]
Using Timetric in the Classroom [27 Sep 2011]
Unit 2 Macro: Exercise on National income [27 Sep 2011]
Unit 4 Macro: Greek Economy at Default’s Door [25 Sep 2011]
Unit 4 Macro: IMF Flags up Risks of Double Dip [20 Sep 2011]
Study Note - Measuring national income [16 Sep 2011]
Study Note - Value Added and Contributions to a Nation’s GDP [16 Sep 2011]
Study Note - Introduction to GDP [15 Sep 2011]
Unit 2 Macro: Economic Growth and Inequality [14 Sep 2011]
Study Note - What is Macroeconomics? [13 Sep 2011]
Unit 2 Macro: Income and Wealth in the UK [12 Sep 2011]
Unit 2 Macro: Value Added in Production and GDP [11 Sep 2011]
50% tax rates - Chuck it George [7 Sep 2011]
Unit 4 Macro: GDP per person since the credit crunch [19 Aug 2011]
Unit 4 Macro: Dangers of High Inflation [11 Jul 2011]
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AQA ECON4 Context [20 Jun 2011]
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AS Macro Key Term: Deflation [24 May 2011]
AS Macro Key Term: Cost Push Inflation [24 May 2011]
AS Macro Key Term: Inflation [24 May 2011]
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A2 Micro: High and Low Marginal Cost Products [19 May 2011]
A2 Micro: Ownership and Control in Modern Businesses [18 May 2011]
EU Economics: Comparing the UK with Europe [14 May 2011]
UK Economy Update: What Mervyn Said [11 May 2011]
Macroeconomics revision - measuring Consumer Confidence [4 May 2011]
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