India dominates global remittance flows
India has retained its position as the top remittance recipient, gaining $70bh from its migrants working overseas last year.
Total remittances exceeded $583bn in 2014, according to the World Bank’s latest report. Just over $400bn of this was sent to developing countries: India was followed by China, the Philippines, Mexico and Nigeria in the top five recipient countries globally.
The World Bank expects total remittances to increase by 0.4% this year and by 4.1% in 2016, in line with predicted economic growth. Global remittances are likely to reach $636bn in 2017.
The World Bank’s Chief Economist Kaushik Basu commented: "Migrants and remittances are clearly major players in today’s global economy." He also suggested that these flows "can be leveraged to finance development and infrastructure projects," citing Israel and India which have boosted their economies in recent years with the help of diaspora communities.
Remittances caught public attention after exponential growth in the early 2000s. Catalina Amuedo-Dorantes in her article discusses their pros and cons in her article. She notes that they have the potential to lift up developing economies and improve the well-being of family members left behind by migrants. However, they can also create a culture of dependency in the receiving countries, which can keep labor force participation low.
Meanwhile, Frédéric Docquier discusses the concern that free movement of workers can lead to a brain drain in sending countries, particularly in the developing world. The number of foreign-born people living in economically stable countries has tripled since 1960. However, Docquier also notes that the income-maximizing level of a brain drain is usually positive in poorer countries, meaning that some emigration of skilled workers can be beneficial.
Read more here.
Related articles:
The good and bad in remittance flows, by Catalina Amuedo-Dorantes
The brain drain from developing countries, by Frédéric Docquier