The Impact of Remittances on Economic Growth

May 2008

Drs. Michael Goldberg and Maurice Levi of the Centers of Commerce Insights Panel

Abstract

Remittances have a long, significant history dating to the colonization of mid-19th century Southeast Asia. The same dynamics—and benefits—for families receiving financial support from family members who worked far from home are in effect today, driving labor emigration and, to a great extent, the global economy.

Another aspect of remittances is from home to family members abroad. This is typified today by living allowances sent to support family members studying abroad, and is a non-trivial element in the economies of receiving countries such as Australia, Canada, New Zealand, the United Kingdom and the United States.

This report reviews the association of remittances and economic growth. We also discuss the possible indirect effect of facilitating reliable and economical remittances via mobile phone, which can introduce people to financial services beyond those involving funds transfers and payments. By identifying the categories of people who are likely to find remitting via mobile phone most valuable, we can examine the economic and social factors that are likely to contribute to the potential future growth of these remittance services. Such groups include guest workers, migrants and international students.

 

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