THE IMPORTANCE OF REMITTANCES
Some countries rely heavily on remittances. A case study is dealt with in more detail in the Core 2 section on reducing disparities. (See the very bottom of the page for the case study.)
Remittances vary from year to year depending on the health of the world economy. Remittances must be seen either as a total worldwide flow, or the more important flow to developing countries. It is in the this context that the World Bank produces its annual report which outlines the major flows.
It's vital to remember that 'relative importance' of flows (as stated in the syllabus) is a subjective term. While global official remittances may be relatively small compared to global FDI, they may be significantly larger and therefore more 'relatively important' for specific countries such as Tajikistan and the Philippines.
Remittances vary from year to year depending on the health of the world economy. Remittances must be seen either as a total worldwide flow, or the more important flow to developing countries. It is in the this context that the World Bank produces its annual report which outlines the major flows.
It's vital to remember that 'relative importance' of flows (as stated in the syllabus) is a subjective term. While global official remittances may be relatively small compared to global FDI, they may be significantly larger and therefore more 'relatively important' for specific countries such as Tajikistan and the Philippines.
How big is the remittance flow?
According to the World Bank's 2014 report, "global remittance flows, including to higher-income countries, are expected to rise from US$582 billion in 2014 to US$608 billion in 2015"..."Officially recorded remittance flows to developing countries are expected to grow by 5.0 percent to US$435 billion in 2014, and expand by 4.4 percent to US$454 billion in 2015." So, in short:
- Global officially recorded remittances are roughly US$600bn per year
- Of this, around US$435bn is to developing countries
where do the remittances go?
The map below relates to 2011 figures, and while the size of the flow varies from year to year, the direction of the flow remains fairly constant. The UK Guardian newspaper also offers an interactive tour through the 2011 data.
Source: http://www.theguardian.com/news/datablog/2013/feb/05/remittances-around-world-visualised#img-1
The 'relative importance' of remittances
Comparing to other flows
The size of the remittances flow is therefore high, but not nearly as high as the total amount of Foreign Direct Investment or even the amount of official aid in most countries. This is exemplified in Sub-Saharan Africa; the graph to the right shows remittances and other resource flows to Africa from 1990-2010, and in almost every year since 2000 remittances have been at lower levels than FDI or aid. |
Source: http://www.diasporaalliance.org/the-cost-of-remittances-and-a-6b-difference-for-sub-saharan-africa/
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Comparing values with proportions
The graph below shows the top countries receiving absolute values of remittacnes compared to the top countries receiving a high proportion of income from remittances. The 'relative importance' will the higher for the countries on the right. The countries on the left frequently have very large remittances values because they have a large population, of which some are working abroad. However, for individuals and communities (as discussed in the Core 2 Reducing Disparities section) remittances may remain very important.
The graph below shows the top countries receiving absolute values of remittacnes compared to the top countries receiving a high proportion of income from remittances. The 'relative importance' will the higher for the countries on the right. The countries on the left frequently have very large remittances values because they have a large population, of which some are working abroad. However, for individuals and communities (as discussed in the Core 2 Reducing Disparities section) remittances may remain very important.
Source: http://www.asianphilanthropyforum.org/countries-receive-remittances/
http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934-1288990760745/MigrationandDevelopmentBrief23.pdf