Migration & Remittance: Inextricably linked cogs in the wheel of the global remittance industry

In the year 2000, statistics revealed that 173 million people lived as migrants across the world while in 2017 there were 258 million migrants living in different parts of the world. In 17 years, migrant population increased by 49%.  As a logical consequence of increase in migration there has been a stupendous rise in global remittance flows. In 2000, global remittances accounted for USD 132 billion. However by 2017 global remittances increased 3.6 times and were valued at USD 613 billion. These statistics present a crystal clear picture of how migration and remittances are inextricably linked.

Developing economies are unequivocally dependent on their diaspora population to spur GDP and economic growth through remittances. World Bank’s latest Migration and Development Brief records an 8.5% rise in remittances to low and middle income countries (LMICs), worth USD 466 billion in 2017. Remittances constitute an integral aspect of the GDP of countries like Kyrgyzstan (35%), Tonga (33%), Tajikistan (31%) and Haiti (29%). Remittances bring pecuniary benefits to individual households and the economy in general. They are a gateway for households to exercise greater purchasing power and add value towards their overall human development. Interestingly, it is not only developing economies which stand to gain from migration. According to the International Migration Report (2017), migration has led to 42% increase in the population growth in North America. Europe too, was on the brink of seeing a dip in its population growth but the steady influx of migrants brought about 2% increase in population.

Research reports highlight that during the period 2000-2017 there has been a consistent pattern in migration. Asia saw an addition of 30 million migrants, Europe added 22 million migrants, migrants in North America increased by 17 million while Africa’s migrant population saw a rise of 10 million people. UN reports of 2017 substantiate that more than 50% of the world’s international migrants live in less than 10 countries. The consistent rise in migration from 2000-2017 is one of the key driving factors in rise of remittances.

It can be presumed that migration and remittances are here to stay for the long haul. In that case, it is imperative to gain a microeconomic view of how remittances are consumed in the home country. Most statistics or research findings highlight the channels through which remittances are consumed. Recently Xpress Money had commissioned a survey in the UK to gain insight into the remittance and spending patterns of migrants in the UK. The survey findings led to a better understanding of the surge of millennial migrant workers in the realm of remittances and their liberal remittance behaviour. Remittances, if channelized towards long term investments and entrepreneurial ventures would be a value-add towards economic growth.  Financial literacy and planning may be the way forward for migrants to ensure their remittances contribute to economic progress in the long haul.

In 2018 global remittances are expected to generate USD 616 billion. Without an iota of doubt, global remittances are expected to go a notch higher. If we were to analyse the matrix of migration and remittances, it might be concluded that remittances would cease to exist if international migration were to come to a standstill.  The intelligent way forward would be to ensure maximum utilisation of remittance inflows from a long term investment perspective. A move in this direction would signify a quantum leap that would result in accelerated economic and human development.