Migrants' Remittances Have Potential to Stimulate Economic Development
On 16 June, the world celebrates the International Day of Family Remittances. For IOM, this is an excellent opportunity to highlight the potential of remittances transferred by migrants to stimulate economic growth in developing countries.
International migration is one of the most salient socio-economic phenomena and at the same time one of the most pressing challenges of today's globalized world. While the creation of jobs within the country remains the best option to use the national workforce, many countries include employment abroad in their national development strategy. An increasing number of developing countries, as well as countries with economies in transition, are adopting action programmes, developing legislative acts, and creating institutional structures aimed at facilitating the employment of their citizens abroad, stimulating migrants' remittances to their homeland and at the same time ensuring the safety of migrants.
Remittances have the potential to stimulate development in developing countries. At the macro level, remittances contribute to the stabilization of the balance of payments in recipient countries, while being an important financial resource for poverty reduction. At the micro level, remittances flow directly to poor households and stimulate the growth of the local economy, increasing the turnover of funds in the community.
Remittances from migrant workers are a significant and often the only source of income and support for their families.
Remittances stimulate aggregate demand, increase consumption and, as a result, accelerate economic growth. Remittances increase household disposable incomes, lead to poverty reduction and increase investment in human capital.
IOM Belarus has conducted a holistic assessment of the current situation with labour migration flows and remittances to Belarus and identified a significant impact of the COVID-19 pandemic on the volume of personal transfers from abroad. At the same time, in 2021, positive trends in their recovery were already noted.
In 2020 net compensation of employees received abroad decreased by more than 30% compared with 2019. In 2021, compensation of employees slightly increased, but there was no return to the pre-COVID level.
Increasing the share of remittances in the global GDP and reducing their cost are one of the objectives of the UN Sustainable Development Goals in the field of migration. And Belarus is making progress here. A couple of years ago, the issue of the cost of remittances was quite a pressing one. Migrants used a wide range of formal and informal money transfer schemes. While presently the problem of the form of money transfers and their high cost is no longer relevant. The introduction of digital financial services, first and foremost the development of the market of bank cards, has opened new opportunities to reduce the cost of money transfers. Emigrant workers are actively mastering modern financial instruments and improving their financial literacy.
Now one of the main tasks related to the use of migrant remittances in the short term is to maintain their flow, especially through digital channels, improve the financial literacy of migrant workers, and facilitate their access to financial and banking services.
In the long term, the use of the potential of migrant remittances can be improved through the support for small and medium-sized businesses, and the development of investment opportunities within the country. Meanwhile, an effective mechanism for the transformation of remittances into investments in the real sector of the economy can give an impetus to the stable development of the economy in Belarus.
The statements made in the article are part of the holistic assessment “Current Economic Development Strategies and Integration of Labour Migration Issues in Them, as well as the Current Situation with Labour Migration Flows and Remittances to Belarus, including Gender Aspects” prepared within the framework of the international technical assistance project "Maximizing the Impact of Migration and Labour Mobility in the Sustainable Development of Belarus" implemented by the Office of the International Organization for Migration in the Republic of Belarus and funded by the IOM Development Fund.