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Remittance flows to developing countries are estimated to exceed $300 billion in 2008

Dilip Ratha's picture

With Sanket and K.M. Vijayalakshmi

Newly available monthly and annual data show that remittance flows to developing countries reached $305 billion in 2008 compared to a revised $281 billion in 2007 (see table 1 below, click here for the Excel spreadsheet). The revised estimates translate into a 23 percent growth in 2007, and a 9 percent increase in 2008. While there is a significant deceleration in the growth of remittances in 2008 compared to the previous year, both the levels and growth rates in 2007 and 2008 are higher than previously estimated (more in our Migration and Development Brief 8).

Note that this round of data release reflects more or less final data for 2007, but data for 2008 are still estimates that will be subject to another round of revision in late Spring or early summer.

We are currently revising our forecasts for 2009-10 in light of the latest data revision. We hope to issue a Migration and Development Brief summarizing our outlook shortly, for sure in the next couple of weeks.

Revised estimates

The countries with significant data revisions include the three largest recipients: India, China and Mexico.  Remittance flows to India are conservatively estimated to have reached $45 billion in 2008 (compared to earlier estimates of $30 billion). Remittance flows to China were about $35 billion in 2008, some $8 billion higher than previously estimated, and those to Mexico about $2 billion higher.

The figure for India now corresponds closely with those of the country’s central bank, with some adjustment for reporting by fiscal year instead of calendar year. The revision increases the share of India’s contribution to South Asia’s remittance inflows to 68 percent, up from 59 percent earlier. The revisions to Mexico’s data, according to the Mexican central bank, were due to inclusion of additional intermediaries (banks, money transfer companies etc.). The new figure for China reflects the latest available data from the World Bank’s country desk.   

Remittances data for several other countries that have reported monthly data until end-2008—Bangladesh, Dominican Republic, El Salvador, Honduras, Guatemala, Jamaica, Pakistan, and the Philippines—were also revised to include the latest available figures from the respective central banks. These figures, however, are very close to those estimated earlier as reported in our earlier post. The revisions for this set of countries do not affect the global or regional trends for 2008.

Top recipients

After the latest revisions, India, China and Mexico retain their position as the top recipients of migrant remittances among developing countries. The top 10 recipients list also includes Philippines, Poland, Nigeria, Romania, Egypt, Bangladesh and Pakistan. In contrast, the top recipients in terms of the share of remittances in GDP included many smaller economies such as Tajikistan (45 percent), Moldova (38 percent), Tonga (35 percent), Lesotho (29 percent), and Honduras (25 percent).

Figure 1: Top recipients of migrant remittances among developing countries

Top recipients of migrant remittances among developing countries

Regional trends

After the revisions, the East Asia and Pacific region continues to remain the largest recipient of migrant remittances among all developing regions. South Asia is now the second largest recipient among developing regions, slightly ahead of the Latin America and the Caribbean region. Sub-Saharan Africa continues to remain the smallest recipient among developing regions.

The new estimates show that all the developing regions except South Asia experienced sharp deceleration in the growth of remittance inflows in 2008. Flows to the Latin America and the Caribbean region were flat in 2008, continuing the declining trend in growth since 2006. The growth of inflows to developing countries in Europe and Central Asia decreased from 31 percent in 2007 to 5 percent in 2008, those to East Asia and the Pacific declined from 23 percent to 7 percent, to the Middle East and North Africa from 22 percent to 8 percent, and to Sub-Saharan Africa from 44 percent to 6 percent. Flows to South Asia grew 27 percent in 2008, down only modestly from 31 percent growth registered in 2007.   

Table 1: Remittance flow to developing countries, 2002-2008
Table 1: Remittance flows to developing countries, 2002-2008

e = estimate
Source: Authors’ calculation based on data from IMF Balance of Payments Statistics Yearbook 2008 and data releases from central banks, national statistical agencies, and World Bank country desks. Remittances are defined as the sum of workers’ remittances, compensation of employees, and migrant transfers – see www.worldbank.org/prospects/migrationandremittances for data definitions and the entire dataset.
* Including the revision to Nigeria data in 2007. Excluding that, remittance flows to Sub-Saharan Africa would have experienced a more modest growth rate of 14.4 percent, and to developing countries, 22 percent in 2007.

Comments

Submitted by Dilip on
The Economist has a nice Finance and economics piece on this topic, aptly titled "Trickle-down economics." I especially liked the caption under the picture, "The last redoubt of cross-border finance." In a related blog post, it raises a very important point,"...to the extent that migrants are staying on and continuing to send money home, the easiest thing that richer countries could do to aid poorer ones .... is to simply not crack down on immigration." While migration and remittances can never be a substitute for aid, the plea to tone down tightening of immigration is well-taken. Ask any employer facing falling revenues what immigration controls might do to their ability to reduce costs, and they are likely to say that it would be lot harder to survive - and take a lot longer to adjust - if labor markets are segmented due to immigration controls. It is a lot easier for firms to adjust when they have have more labor market flexibility.

Submitted by Sanjiv Purushotham on
Respected Dr. Ratha, I have recently joined the MasterCard initiative to provide remittance and person-to-person payment services. In large part, this was move was inspired by your articles and papers on worker remittances and the impact of this on developing economies. With specific reference to the subject markets, is there any estimation of the sources of remittances by country to each of these receiving markets? Many thanks, Sanjiv

Submitted by Dilip on
Sanjiv, thanks for your kind words. Regarding your question, we have posted a bilateral migration matrix for 200 odd countries and three correpsonding matrices for bilateral remittance flows on our website (http://go.worldbank.org/U4RXL56V20). As you can imagine, these data are not precise. For one, a large part of the flows - of people and money - is not recorded in official statistics. For another, remittances often get attributed to the country where the headquarters of the financial intermediary are located, rather than to the actual source country. This is especially true of remittances by seafarers. So we have tried to estimate these flows using various theoretical arguments, such as that remittances are a function of the size of the migrant stock, the income level on the destination country, and the cost of living in the origin country. Such methodological details are provided in my paper on South-South migration and remittances (http://go.worldbank.org/U4RXL56V20). Let me know if you have any thoughts, or better information.

Submitted by Simon Seitz on
Hi Dilip, thanks for the excellent blog and the exhaustive factbook on migration and remittances. It really helps with the study I am currently doing. I have one question. In the country sheets, the stocks of of immigrants and emigrants are contrasted as well as the top destination/source countries named. Does a source exist, which quantifies these, i.e. how many immigrants/emigrants are from/in which country? E.g. Russia: Immigrants: Ukraine: x ths, Kazahkstan y ths. etc. I appreciate your answer very much Kind regards Simon

Submitted by Alain Ndedi, PhD on
For a long period of time, money from African immigrants living in Western countries has not drawn any particular attention on African development by academics and scholars. Many reasons explain this reluctance to explore internal or domestic answers to our problems instead of relying on Western panaceas to deal with our own ills. As usual, we Africans don’t have faith in our abilities, always depending on Caucasian states or initiatives to change our destiny. In her recent work on African aid, a well known Zambian scholar, Dambisa Moyo in her recent book entitled, Dead Aid: Why Aid Is Not Working and How There is Another Way for Africa, argues that foreign aid has harmed Africa and that it should be phased out. The author was not arguing that any cash flown on African economies is harmful. Her thoughts are looking to more internal measures first, before looking at any external remedies to change the course of history which is not currently favourable for us Africans. Annually approximately, twenty millions international migrants originate from Sub Saharan Africa, and at the same time, their remittances are growing without any particular attention by their respective states. Why remittances are not working for Africa, or why these cash flows injections in African economies are ineffective?

Submitted by Manish Chawla on
Dear Dilip Would you be kind enough to send me some information on the Money Transfer Services in China. We need to explore the possibility to starting MTS in China. Manish Chawla Vice-President Reliance Money Express India

Submitted by Vinod on
Dear Dilip Would you be kind to send me some information on the remittance market inflow and outflow data in UAE and Qatar as this data not available in World Bank data. Please provide any other links are there to find this data or estimates ? regards, Vinod P

Hard data on migration and remittances in the GCC countries are hard to come by. We have posted partial data on migration stocks in some GCC countries in the Factbook (http://go.worldbank.org/QGUCPJTOR0). We often come across news reports from the region citing data on migration and remittance flows, but they tend to be anecdotal. Perhaps other colleagues have access to information sources? Dilip

Submitted by YP GAURAV on
hey dilip....your article are quite resourceful.im doing a project work in which im analyzing the clear remittances pattern to india and factors effecting.I want to know the demographic distribution of the indian diaspora in those countries from where large amount of remittances come to india.....can you please suggest the resource from where i can get this. YOGENDRA PRASAD GAURAV NATIONAL INSTITUTE OF BANK MANAGEMENT, Reserve Bank India Management Training centre, Pune.

Submitted by Amit on
Hi I am interested in getting some information on Domestic Money Transfers in India. Would welcome relevant statistics on flows, corridors, profile of migrants, mode used, mode preferred etc. Thanks Amit

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