Book Chapter
Remittances by Emigrants

Issues and Evidence

Remittances from migrants are a growing force, and this chapter considers the role that they can play in financing development. To an important extent, they finance consumption, and are an international mechanism of social protection based on private transfers; they can also contribute to financing investment, providing community infrastructure and funds for the financing of new enterprises.

The motives for making such remittances, and the problems of measuring their extent are considered, as are the variety of financial entities through which they are channeled, and policies for reducing the cost of remittances and enhancing their development potential.

The chapter is organised in five main sections which: discuss global and regional trends in remittance flows and their growing importance as a source of external transfers to developing countries; examine measurement issues and discuss the main micro‐motives for remittances and the implications of their cyclical behaviour for stability; analyse the development impact of remittances (effects on savings, investment, growth, poverty, income distribution); overview the international market for remittances, and provide evidence on the costs of sending remittances to various country groups; and highlights policies for reducing the costs of sending remittances and thus enhancing their developmental impact.