Global Migration
Global Migration
2. What are the benefits and detriments of economic dependent on migrant remittances?
- A remittance is a transfer of money, often by a foreign worker to an individual in their home
country. Money sent home by migrants competes with international aid as one of the largest
financial inflows to developing countries. Remittances can have both positive and negative effects
on the economy’s recipient countries. Here are some of its benefits and detriments on the
economy:
-
o Pros
▪ The transfers provide a country’s economy with foreign currency, help finance
imports, improve the balance of payments in its international accounts, and
increase national income.
▪ Remittances can increase the sell-being of receiving household by smoothing
consumption and improving living conditions.
▪ Remittances can ease the credit constraints of unbanked households in poor rural
areas, facilitate asset accumulation and business investments, promote financial
literacy, and reduce poverty.
▪ It can facilitate the accumulation of human capital by making possible improved
sanitary conditions, healthier lifestyle, proper healthcare, and greater
educational attainment.
o Cons
▪ Remittances can reduce labor supply and create a culture of dependency that
inhibits economic growth.
▪ Remittances can increase the consumption of nontradable goods, raise their
prices, appreciate the real exchange rate, and decrease exports, thus damaging
the receiving country’s competitiveness in the world markets.
▪ Remittances can be curtailed, along with international migration, by escalating
anti-immigrant sentiment and tougher enforcement practices in host countries,
including the US and many Europe and the Gulf region.