Viewpoint: Remittances, The Flywheel Of The Global Economy
By Dante Disparte
Peer to peer money transfers across borders, or remittances in the short form, are arguably the world’s most important international cashflow. Compared to other cross-border capital flows, such as foreign direct investment (FDI), or official development assistance (ODA), which is typically channeled through multilateral institutions or as bilateral aid, remittances are not only a bigger overall figure, they are more persistent. Remittances have also demonstrated recession resistance. During the 2008 global financial crisis, all cross-border cashflows declined precipitously, while remittances held their course, charging to a projected $715 billion globally in 2019, which is merely the tip of the iceberg as the officially reported figure.
In a world roiled by populist sentiments and anti-immigrant tendencies, the world’s well-trodden migration corridors, which follow remittance corridors one to one, are under strain. It would seem fitting (if tragic), that a world hellbent on retrenchment and deglobalization, is not only raising barriers to entry to the more than 260 million economic migrants around the world, it is also squeezing remittance flows with costly transfer fees.
Photo courtesy of AMISOM Public Information.