Remittances

Remittances refers to monies spent or invested in a country other than where the money was earned by migrants; in that way they help to link together migrants, families, regions, and nations, and thus, they are an important part of globalization. Remittances are transnational transactions and help to connect people in the same way that phones, email, and mail keep people in different countries in touch. Most of the literature about remittances is focused on Mexico as well as on Central and South America. These regions account for approximately one third of all remittances. Less is known about the dynamics related to remittances in Africa, Asia, and eastern Europe.

The scope and actual amount of remittances can never be known. Most of the current reporting comes from national banks that report on nonbusiness currency exchange activity. Current estimates of global remittances range from US$320 billion to US$350 billion annually. Whatever the actual number, two facts are known: that remittances flow in the opposite direction of migration flows and that the flows of remittances reflect the economic health of sending countries. According to the World Bank, global remittances fell from US$338 billion in 2008 to US$307 billion as a result of the global financial crisis in that year. The −8% decline, while dramatic, is far less than the decline in private-sector investment to developing countries. As the global crisis eases, remittance amounts will increase once again.

There are numerous mechanisms for sending remittances, including cashier's checks, postal checks, use of transfer services such as Western Union, and the electronic transfer of funds directly to the recipient's bank account. The options for remittances are many because the commissions for fund transfers are profitable.

Some forms of remittances cannot be measured—such as cash that is taken home during visits; goods that are mailed or sent home; savings accounts established in the home country; or funds invested in transnational businesses.