About the Report

Global Economic Prospects 2006: Economic Implications of Remittances and Migration explores the gains and losses from international migration and policies to improve the developmental impact of migration, with particular attention to remittances.

 

Recorded remittances sent home to developing countries by international migrants are expected to reach $167 billion in 2005. Unrecorded remittances through formal and informal channels are estimated to be at least half as large as recorded flows, making remittances the largest source of external financing in developing countries. Remittances substantially reduce the incidence of poverty, and help smooth household consumption in response to adverse events.

 

International migration generates significant economic gains for the migrants, the countries of origin, and the countries of destination. The benefits to the countries of origin are especially large in the case of low-skilled migration. The most feasible means of increasing such emigration would be to promote managed migration programs between origin and destination countries that combine temporary migration of low-skilled workers with incentives for return.

 

The price of remittance transactions is often unnecessarily high for the small transfers typically made by poor migrants.  Governments could lower fees and expand remittances by improving the access of poor migrants and their families to formal financial services, and by promoting competition in the remittance transfer market (for example, by lowering capital requirements on remittance services, improving transparency, and opening up retail financial networks to nonexclusive partnerships with remittance agencies).  Increasing low-skilled migration and reducing remittance fees could together make significant progress towards the alleviation of poverty.

 

Chapter 1 of this study reviews recent developments in and prospects for the global economy, and their implications for developing countries. Chapters 2 and 3 evaluate the costs and benefits of migration, through model-based simulations and a review of the economic literature.  Subsequent chapters address remittances, including their size and macroeconomic impact (chapter 4), their impact on households (chapter 5), and policy measures to lower the cost of remittance transactions for poor migrants (chapter 6).