What are the top countries receiving and sending remittances?

Against the background of our earlier post on a pending bill in the Indian parliament to allow dual citizenship to accommodate the growing Indian diaspora, it is important to again highlight the role of remittances. Although according to the most recent 2018 World Migration Report, the flagship publication of the International Organization for Migration, there was a small decline in the global flow of remittances in recent years due to lower transfers from oil exporting countries caused by a downturn in oil prices, the overall trend since the mid-1990s is that remittances “have greatly surpassed Official Development Assistance (ODA) levels, defined as government aid designed to promote the economic development and welfare of developing countries”.


The report also gives some insightful information about the top countries receiving respectively sending remittances for the period 2000-2015. One noteworthy statistic is that India, Mexico and the Philippines have consistently been among the top countries receiving remittances, but that China – which was not even in the top 10 in 2000 – has occupied either the first or second place since 2005. From 2015 onwards, China has also been among the top countries sending remittances. Ranking fourth in 2015, China did not feature in the top 10 in the years prior to 2015, however. Among the other top sending countries are the United States, Saudi Arabia (given the many guest workers), Switzerland, Germany (which has a large Turkish community), and finally the Russian Federation.


While the IOM report contains absolute numbers regarding remittances, a report by Heliodoro Temprano Arroyo for the Migration Policy Centre also ranks remittance-receiving developing countries according to the impact of remittances as a percentage of their GDP. Although it comes as no surprise that countries such as Haiti and Liberia score high, with remittances contributing almost 30% to GDP, it is more remarkable that there is also a European country in the top 10: remittances are responsible for almost 20% of GDP in Moldova.


Temprano Arroyo confirms the IOM’s conclusions by noting that remittances are now four times larger than total ODA. This fact is important in explaining why remittances are important in the context of the EU’s migration strategy. As Temprano Arroyo explains, “there is evidence, though not conclusive, that [remittances] can be an effective channel to foster economic development in poor countries because, by complementing official ODA, they can help potential migrants reach the income threshold beyond which the propensity to migrate starts to decline”. The second and perhaps even more relevant effect of remittances on migration “has to do with their stabilizing and social safety net properties”. Remittances not only tend to be more stable than other international private financial flows, but they can also play a counter-cyclical role from the point of view of the recipient countries. Remittances have indeed remained relatively unaffected during the global financial crisis.


Author: Olivier Vonk

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