Live revision! Join us for our free exam revision livestreams Watch now



Remittances are funds that migrants send back to their home countries. These funds are typically sent through formal channels such as banks or money transfer services, and they represent an important source of income for many lower income countries.

Remittances are important for lower income countries for several reasons. First, they represent a significant source of foreign currency inflows, which can help to stabilize the country's balance of payments and improve its ability to pay for imports. This is particularly important for countries that are heavily dependent on imported goods and services.

Second, remittances can provide an important source of income for families and communities. Migrants who send remittances are often able to support their families and invest in local businesses, which can help to boost economic growth and reduce poverty. In some cases, remittances can account for a significant portion of a country's gross domestic product (GDP).

Third, remittances can also help to reduce the incidence of poverty and inequality. By providing a source of income for families and communities, remittances can help to reduce the vulnerability of households to economic shocks and other risks. They can also help to support access to education, health care, and other basic needs.

Overall, remittances are an important source of income and foreign currency inflows for many lower income countries. They play an important role in supporting economic development and reducing poverty and inequality, and they can help to stabilize the balance of payments and support macroeconomic stability.

© 2002-2024 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.