remittances

Remittances are money transfers from migrant workers to households in their country of origin. They are usually sent regularly and can move through formal systems like banks, money transfer operators, and mobile money, or through informal networks.

Global remittance flows to low- and middle-income countries total in the hundreds of billions of dollars annually. Estimates commonly place the figure at roughly 600 to 700 billion dollars, with the largest receipts in Asia, Latin America, and Africa.

Channels include formal options such as banks, money transfer operators, and mobile money, which offer speed and record-keeping but often charge fees and offer varying exchange rates. Informal channels can be cheaper or faster in some corridors but carry higher risk.

Drivers and corridors: remittance flows rise with migrant labor supply, wage gaps, and family needs. Major corridors connect high-income countries to lower-income ones across North America, Europe, the Gulf, and parts of Asia and Africa, with exchange rates and financial inclusion shaping actual transfers.

Economic and social effects: remittances can stabilize household income, bolster education and health spending, and support local investment. They also provide foreign exchange and can influence national economies, though heavy reliance may crowd out domestic investment or affect labor supply.

Policy and challenges: governments seek to reduce costs through competition, regulation, and digital innovations, while strengthening financial inclusion and AML/CFT safeguards. Costs remain uneven across corridors, and regulatory burdens can raise fees for senders and recipients.

Measurement and policy context: remittance data are published by the World Bank and other agencies. They distinguish worker remittances from other capital flows, and differ from foreign direct investment or official development assistance.