Migration and Remittances

Based on article from The Economist, 22 January 2007

Most of the migrants which move West send home remittances - this money flow adds to the $19 billion that flow annually. In the case of Moldova, remittances make up more than 25% of the GDP, only exceeded by countries like Haiti and Tonga.

It is argued that remittances prop up current accounts and helps the development in the home country. Phillippe Legrain, in his book, 'Immigration: Your Country Needs Them' points out that aid to governments is usually squandered and wasted or siphoned off into a bank account.

However, it is also argued that remittances keep currencies artificially high and also harm growth. Only about a third of remittances goes towards education, savings and business investments. Remittances may also be only a mild stimulant to growth as it has less of an impact on poverty - the reason for this is due to the fact that most of the migrants come from better off backgrounds, who are the ones sending home remittances.

Links:
Europe's huddled masses - The Economist