Global Remittances Essay
SUBJECT: GLOBAL REMITTANCES
The International Monetary Fund (IMF) defines remittances as international transfers of funds sent by migrant workers from the country where they are working (source country) to people, typically their family members, in the country from which they originated (receiving country).
Remittances represent household income from foreign economies arising mainly from the temporary or permanent movement of people to those economies. Remittances are mainly derived from two items in the balance of payments framework: income earned by workers in economies where they are not resident (or from nonresident employers) and transfers from residents of one economy to residents of another.
1. Where are remittances …show more content…
Remittances are significant contributors to developing and smaller countries around the world. According to the Global Remittances Mini-Case, remittances often make up a very small, often negligible cash outflow from sending countries; however it represents a very significant volume for developing countries, sometimes more than 25% of their GDP. Over the past 15 years, the inflow of remittances to developing economies has grown sixfold, from $56 billion in 1995 to $334 billion in 2010 . Majority of remittances are received by developing countries, in countries for example Mexico, remittances now make up the second largest source of foreign exchange earnings- and the government has increasingly viewed remittances as an integral part of the balance of payments
Remittances make up a very small cash outflow fron sending countries such as the US, however they have contributed significantly to countries such as Veitnam, Pakistan, Indonesia, Morroco, etc. (which have received between $5 billion to $15 billion), as well as Algeria, Brazil, Japan, etc. which fall in the category of $1 to $5 billion in remittances through formal channels. The World Bank estimates that $414 billion was remitted in 2009, with $316 billion of this total going to developing countries. More