Remittances: The New Development Mantra?

Download PDF155 KB

Abstract:

Remittances are emerging as an important source of external development finance. They have been growing in both absolute volume, as well as relative to other sources of external finance. Perhaps even more important, they are the most stable source of external finance and are providing crucial social insurance in many countries afflicted by economic and political crises. But, as with all substantial external resource flows, the effects of remittances are complex.

The paper examines this growing external resource flows to developing countries. It first highlights the severe limitations in data, a sharp contrast to other sources of external finance. It then analyzes (based on this limited data), the key trends in remittance flows. The paper then examines the many complex economic and political effects of remittances. It highlights that while the effects of remittances are greatest on transient poverty, the long–term effects on structural poverty are less clear, principally because the consequences for economic development in general are not well understood. The paper then suggests some policy options to enhance these flows and maximize the benefits. Finally it concludes with some suggestions for future work.

Notes:

Last updated on 06/23/2016