The amount of money sent by emigrants to their countries of origin often exceeds that of international development aid programs. But what impact do these huge remittances have on the economies of countries? The observations are often contradictory. To understand them, economists Nicolas Destrée, Karine Gente, and Carine Nourry propose a model that links remittances, growth and education.
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Western Union, World Remit, Remit Ly... You have probably already come across or used one of these organizations offering to transfer money abroad: these remittances are also called remittances. In 2020, with 281 million immigrants, these operations represented 540 billion dollars, or the equivalent of Belgium's annual GDP. In Tajikistan and Kyrgyzstan, they represent more than 30% of national GDP.
These remittances constitute considerable financial resources for the economies of these countries, and they are probably underestimated. Transfers are very expensive (private organizations take between 6 and 20% of the sums sent, plus exchange rates), it is possible that part of the sums are sent informally. But what is the impact of these money transfers? This is a question that many economists have studied, with sometimes contradictory answers.
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Article originally published in Dialogues Économiques, October 25, 2023.
Reference: Destrée N., Gente K., Nourry C., 2021. "Migration, Remitance and Accumulation of Human Capital with Endogenous Debt Constraints," Mathematical Social Sciences, 112, 38 60.
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