Sending money home: Can remittances reduce poverty? (2006)

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This issue of id21 insights focuses on remittances and how they can reduce poverty:
  • Sending money home: Can remittances reduce poverty?  At least US$232 billion will be sent back home globally by around 200 million migrants to their families in 2005, three times official development aid (US$78.6 billion dollars). Moreover, migration and remittance experts argue that the unofficial transfers could be as large as formal flows. What impact is this having on poverty reduction.
  • Do remittances reduce poverty?  International remittances to developing countries will total around US$167 billion in 2005, more than twice official aid flows. Despite the ever-increasing size of international remittances, little attention has been paid to their effect on poverty and income distribution in developing countries and many policy questions remain unanswered.
  • Improving health and education: Remittances encourage investment in education and health, especially for children. New research suggests they can help families break the cycle of poverty and improve living conditions for future generations.
  • Boosting economic growth: Remittances by international migrants to their countries of origin constitute the largest source of external finance for developing economies after foreign direct investment (FDI). Estimated official remittances are US$167 billion for developing countries in 2005, double total development aid.
  • New regulations restrict Somali remittances: Approximately one million Somalis send US$1 billion back home every year, a crucial source of income for most of the Somali population. New regulations, however, as part of the 'war on terror', are restricting the flow of remittances into the country.
  • A better quality of life?  Remittances have an important role to play in the economic development of a country. Yet their impact is primarily seen at the regional and local level as a source of income to improve the wellbeing of thousands of households in migrant-sending countries.
  • Sending money home to Asia: Half the world's international migrants and most international labour migrants come from Asia. It is the main destination region for remittance flows from north to south, as well as within Asia from countries such as South Korea, Singapore, Hong Kong and Thailand. The scale of remittances in Asia is unknown, however, and few policies exist to maximise their developmental impact.
  • Gender matters: Are remittance flows gender-neutral? Does it matter if the people involved in these transactions are male or female? Do remittances reshape gender relations?
Language: English
Imprint: id21 insights issue #60, January 2006 http://www.id21.org/insights/insights60/insights60.pdf 2006
Series: Newsletter,
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