One of the most overlooked drivers of the global economy is the money sent from the large number of people around the world who work abroad, the so-called remittances which go to their families and villages.
Each remittance, taken on its own, may not seem like very much, but when added together, the money sent home adds up to about $413 billion every year, which not only serves to help make life better at home, but because it goes directly to those in need, can have a big impact. In fact, in many countries, remittances are larger, and more stable, than foreign direct investments, so this form of global cash flow can have a significant influence in the lives of those who receive it.
However, the rules and regulations for sending money home can vary wildly by country, and fees and charges can end up taking a good percentage of the original amount, so remittances still aren’t nearly as effective as they could be in helping to alleviate poverty in workers’ home countries.
As this TED Talk from economist Dilip Ratha, manager of the Migration and Remittances team at the World Bank, points out, these “dollars wrapped with love” are being skimmed off and stifled by a number of obstacles, which he says need to change in order to make remittances safer and cheaper.