Say you grow up in an economically slumping area and few prospects are available. You can either scrape by financially for the foreseeable future or you can head somewhere else where good work is more abundant. You’re an ambitious person, so you make the journey to another country. The only thing is, your family stays behind fully expecting (and needing) you to send support.
And, once you get settled, you do send support--lots of it.
Each month, you send a portion of your paycheck home to your family. This portion is way more than what your family is able to earn or what you would have earned back home, so their lives improve markedly.
Now your family can spend more on education and health, invest in businesses, buy information and technology devices, bolster their homes in case of a disaster, become more connected to the global economy and various other livelihood-enhancing things.
Thanks to your steady flow of money, your kids have relatively comfortable lives, go to college in their home country and end up with high-paying, high-skill domestic jobs.
This trajectory is increasingly common. The World Bank estimates that 230 million people live outside their country of birth, and 700 million are internal migrants. Climate change, conflict and globalization will drive these numbers up in the years to come.
These migrants collectively sent $583 USD billion back home in 2014, $440 USD billion of which went to people in developing nations. Transferring money in this way is called a remittance, and, collectively, remittances nearly quadruple total foreign aid.
Ordinary people are sending home 4 times more than aid from developed nations. Wow.
I’ve used Western Union to send money a few times, but never as a weekly or monthly routine. Never on a level that would change state finances.
In 2013, India received $70 USD billion in remittances, China $60 billion, the Philippines $25 billion and Mexico $22 billion. Other large beneficiaries include Nigeria, Egypt, Bangladesh, Pakistan, Vietnam and Ukraine. (Note on China: this number most likely does not accurately reflect the large amount of internal migrants that send money to families back in their hometowns)
For some countries, remittances are a major part of GDP.
In Tajikistan, remittances make up 52% of GDP. Nepal, Moldova, Samoa and Lesotho all get around 25% of GDP from remittances.
From one perspective, the flow of remittances underscores just how dismal many economies around the world are.
If jobs are so scarce or so low-paying that people have to make the difficult decision of leaving their family for years at a time just to earn a reasonable living, then governments have to dramatically improve conditions for citizens.
Internally, in places like China governments must ease regulations that make it hard for children of internal migrants to go to school where their parent(s) actually work.
Or internationally, many migrants from Latin America go to the US and often spend years without seeing their families. They work incredibly hard, live frugally and send money back to home to give their children a better life.
It’s sad that they have to take such measures. It’s also sad that US policy--in a country of immigrants--is so ruthlessly against immigration.
From another perspective, remittances help to redistribute global wealth and modernize economies.
Remittances can provide the capital needed to improve economies. Going abroad can also equip people with skills, knowledge and connections that they can leverage to start businesses and campaign for change back home.
Since the world rarely agrees on how much aid to commit or how to tackle the world’s biggest problems, it’s good to see regular people taking such initiative and trying to improve impoverished communities one paycheck at a time.
Now countries have to support these remittances by guiding development efforts such as building schools to make sure money sent home can be put to the best use imaginable.
In the meantime, you can help bring foreign aid to higher levels by calling on world leaders to support The Global Goals in TAKE ACTION NOW.