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Impact of emigration

Remittances

The main advantage of emigration for the sending countries is that emigrants send much of their earnings home in the form of 'remittances' — providing much needed foreign exchange.

Global remittances reached an estimated $204 billion in 2004, including $144 billion to developing countries. India, Mexico and the Philippines received a third of remittances to developing countries. The Philippines Central Bank estimates that the country's seven million overseas workers on average send home over $400 per month. But many migrants avoid official banking systems.

For many countries, such as Egypt, and Bangladesh remittances have become a crucial source of income and foreign exchange. And they are also a vital source of income for millions of families.

What do their families do with this money? Many, particularly in Africa, will immediately spend more on food and other household essentials as well as education for their children. Others will spend money on housing or land. The families of emigrants also commonly buy land, either for farming or as an investment. Another possibility is simply to save the money or to invest in new businesses.

Migrant remittances also have a beneficial 'multiplier effect' on the economy as a whole. For Mexico, the $2 billion in 'migradollars' that were arriving in the early 1990s are thought to have increased overall annual production by $6.5 billion. This was because agricultural communities, for example, used remittances to buy more equipment, fertilizers, and other items that helped to increase output.


Western Union poster in Madrid

Western Union in Madrid advertizes its servces for sending money to Latin America.
Photo:Daniel Lobo