Earlier this month, the World Bank released its latest development brief on migration and remittances, projecting that remittance flows would continue to grow as the global economy also trudges along in recovery. Remittance flows to the developing world hit an all-time high of about 404 billion USD in 2013 and will likely increase by 7.8% to 436 billion USD in 2014.
Where all the remittances went in the developing world
The top remittance recipient was India, receiving an estimated total of 70 billion USD. Next was China at 60 billion, and then the Philippines at 25.4 billion. Here’s a look at the top remittance receivers among developing countries:
Why the remittances matter
People usually think of remittances as a supplementary tool — something migrants send to their families back home to help them get by. But remittances play a significant macroeconomic role as well. Remittances sums regularly surpass foreign aid, and they represent a more stable form of foreign capital flow than debt and private equity to many developing countries. Anecdotally, we also know that remittances can become a form of philanthropy in some communities as well. Remittance sums also rival total income from entire industries. In India, for instance, remittance were greater than the earnings the country collectively took in from IT services. In Bangladesh, remittances equaled 84% of the country’s garment exports. Remarkably, remittances made up 52% of the total GDP in Tajikistan in 2012 and 31% in the Kyrgyz Republic.
With remittances becoming such a pillar of some developing economies, the World Bank has also been pushing for greater recognition of remittances in credit ratings to help stabilize developing countries and help them access other forms of capital flows. Many countries are also now exploring the idea of diaspora bonds, which are exactly what they sound like—bonds marketed by governments to their respective diasporas. African countries have been particularly early adopters of this form of fundraising.
Remittance data underlie a lot of social and demographic narrative as well. For instance, the slight dip in remittance growth in South Asian countries is reflective of legal disputes with Gulf Cooperation Council Countries (Saudi Arabia, Qatar, Bahrain, etc.), where many South Asians emigrate to work. Looking more broadly, remittances also reflect the continued inequality of opportunity across multiple regions. The biggest migration push factors now are opportunity-related, rather than politically, religiously, or conflict related.
But it’s really not just developing countries that benefit from remittances.
Including remittances received by high-income countries in 2013 brings the total inflow of global remittances up 34% to 542 billion, which means developed countries also received 138 billion in remittances. Germany and France made the top ten in remittances received among all countries. In terms of net gain among high income countries, France received more remittances than it sent out in 2012 with a 9.3 billion gain, followed by Belgium at 5.9 billion and Poland at 5.3 billion.