Global Development - The Importance of Remittances

This IMF clip looks at remittances, and their impact on developing economies. It acknowledges the greater ease of transferring resources, and the importance of this income in boosting growth and reducing poverty in developing economies.

It's interesting to note the size of remittances around the world: Mexico's remittances are worth more than its oil exports, Sri Lanka's are more than its tea trade, and Egypt's are more than its income from the Suez Canal. Indeed in 2022, remittances were worth more than FDI and foreign aid combined.

Remittances are money transfers sent from people who have moved abroad to their home countries. These transfers can be critical for lower-income countries, providing an important source of income and support for families and communities. In some countries, remittances can make up a significant percentage of GDP. They can be used to pay for basic needs like food and shelter, as well as to invest in education, health care, and other areas that can boost economic development.

The countries that are most dependent on remittances are typically developing countries with large diaspora populations living and working abroad. For example, India is the country that receives the most remittances, followed by Mexico, China, and the Philippines. These countries all have large populations of people who have migrated to other countries for work, and they send a significant portion of their earnings back home to support their families and communities. In some cases, remittances can make up a large percentage of a country's GDP, and they can play a vital role in reducing poverty and stimulating economic growth.