Immigrant workers who send money home to their families are a major source of critical funding for p
Thursday, November 17, 2005
Rich and poor countries need to make it cheaper for immigrant workers to send money back to their families to ?sharpen? the impact of remittances on poverty reduction, the World Bank said on Wednesday.
International remittance flows to developing countries are expected to rise to $167bn (?143bn, ?97bn) this year, twice the amount of official aid paid by governments, the bank said in its Global Development Prospects report.
Unreported flows mean that remittances are probably 50 per cent greater than the recorded number, at a conservative guess, the bank said. Up to 45 per cent of total remittances are paid by migrant workers in other poor countries, it said.
?With the number of migrants worldwide now reaching almost 200m, their productivity and earnings are a powerful force for poverty reduction,? said Fran?ois Bourguignon, the bank?s chief economist.
As well as increased immigration and higher incomes, the rise in remittances reflected changes in the financial services industries that have made it easier to transfer money, and better measurement.
The countries receiving the greatest remittances are ? in order ? India, China, Mexico, France and the Philippines.
Wage levels in rich countries are typically five times those of poor countries in similar occupations ? adjusting for local purchasing power ? the bank said. ?Essentially migrants can earn salaries that reflect industrial-country prices and spend the money in developing countries,? the report said.
The bank called for policies to improve the access of poor people to financial services to send and receive remittances ? including expanding banking networks and credit unions and allowing developing country banks to open branches in rich countries.
Major international banks tend to focus on large-value remittance services rather than on services for migrants. Expanding access to financial services in poor countries would have development benefits beyond the impact on remittance flows, the bank said.
It also called for policies to improve competition in the market for remittance transfers to lower fees.