The Impact of Migrant Remittance on Economic Development

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Updated: Aug 20, 2023
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The significance of remittances for the economic boom of the U.S. is evaluated based on district-wise poverty alleviation. It is determined that migrants from overseas are positively contributing to poverty reduction in three provinces: Punjab, Sindh, and Balochistan. Furthermore, in the long run, remittance inflow leads to an expansion of the nation, playing a crucial role in poverty reduction. Tehseen Jawaid (2012) sheds light on the significance of overseas remittances for the economic growth of Pakistan using data from 113 countries during 2003-2009 for analysis. The findings suggested a positive and significant relation between foreign remittances and the economic growth of these nations. Remittances encompass workers’ remittances, compensations of employees, migrant transfers: all of which are obtained from the balance of payment accounts of receivers and remitters, according to the World Bank. The International Monetary Fund refers to remittances excluding “transfers of migrants”, as it claims they are mostly unrelated to remittances and therefore misleading.

Essentially, transfers of migrants refer to capital transfers of financial assets made by migrants as they move from one country to another, and these are residents who stay for more than a year. Remittances are funds sent by migrant workers in foreign countries to their countries of origin. Hence, remittances include financial and non-financial items sent back home to their families by migrants (Berhane, 2005). Remittances from migrants have positive impacts on poverty reduction and development in Somalia, notably contributing to the achievement of the Millennium Development Goals. These positive effects increase when remittances can be saved and invested in infrastructure and productive capacity.

Government policies bring about such use. Significant barriers to migration and remittance transfers need to be addressed to tap into opportunities for development and poverty reduction. This includes easing financial transfers, establishing appropriate incentives, enhancing coherence in migration and remittance policies, and facilitating the rapid movement of people. The relationships between remittance and economic development in Bangladesh are generally explained in two ways: the macroeconomic benefits of remittance and the microeconomic benefits at the household level. The migration of people seeking economic opportunities has significant implications for development. This has positive effects on households’ well-being and economic growth through increased income and better integration into the global economy (World Bank, 2006). The remittance expenditure is often preceded by an examination of the motivations for migration and subsequent remitting behavior, with three strands of literature relevant in this context.

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The impact of migrant remittance on economic development. (2021, Oct 16). Retrieved from