The widespread impacts of remittance flows

Abstract

Remittance flows have the potential to greatly improve the livelihoods of receiving households by smoothing their consumption and enabling investments back home. They can facilitate economic stability, improve creditworthiness, and attract investments to promote economic growth and reduce poverty rates for recipient nations. Data limitations need to be overcome in order to best assess the impacts of remittances and to design policies that facilitate the transmission and productive use of inflows. Policy recommendations range from easing capital controls to reforming immigration policy. ELEVATOR PITCHRemittances have risen spectacularly in absolute terms and in relation to traditional sources of foreign exchange, such as export revenues. Remittances can improve the wellbeing of family members left behind and boost growth rates of receiving economies. They can also create a culture of dependency, lowering labor force participation in recipient nations, promoting conspicuous consumption, and accelerating environmental degradation. A more thorough understanding of their impacts can help formulate policies that enable developing economies to harness the most out of these monetary inflows.