As labor migration expands dramatically throughout the world, economic remittances from destination countries are by all accounts a major source of income for those left in impoverished source countries and regions. Scholars of migration differ on the consequence of remittances. Does your research demonstrate that remittances are a major source of economic development in countries of origin? Should we consider remittances a useful concept in understanding the development of meaningful economic growth in source countries?
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Yes it is correct. People who have gone abroad from the impoverished countries are the major portion for their families well-being. Of course the persons in alien countries are in real troubles. The questions why they are out of their cultural conformity and why they are away from that very sense of natural conforms that they should be within the unit/natural unit.
The impact of remittances must be understood in terms of macro and micro economic impacts and effects on social distribution. Receivers of remittances can use funding towards education, health and other basic needs that they otherwise do not have. If the lack of these public goods are due to inadequate governments programs then the use of remittances would result in uneven social distribution, and at the same time, they may alleviate poverty for those receivers. The net result is alleviation of absolute poverty but a wider income and social distribution gap. Remittances can increase consumption of basics goods, or high end luxury goods or real property. Dependent on the taxation policies, and elasticity of pricing of these goods, remittances can impact inflation. As families with emigrants are usually those of higher socioeconomic status or higher educated, remittances can further enhance the income disparity and social stratification. Austere fiscal or tight monetary policies to curb inflation often result in reduction of access to funding or jobs cuts that are borne by the lower socioeconomic group who are often the people without remittances. This is a further entrenchment of inequality.
In my view, remittances can be socially regressive if the country’s public institutions and social/ welfare policies and framework of delivering basic public goods are not adequate or not equity based. For example if remittances are used to acquire educational advantage such as attending private education where the public education system has limited access and quality education for the underprivileged. In the long run, remittances can only be a useful economic tool for development if it is sustainable, does not affect income and social distribution regressively, or macro-economic impacts such as inflation. Much more research should be done to evaluate these impacts in specific country context as current research (such as those conducted by World Bank) seems to suggest only the positive impacts of remittances without consideration for social inequality as consequential consequences).
I agree that the remittances if have enhanced the socio-economic status back at home than it has certainly increased the socio-economic disparities also at the local level. Punjab in India is one of the most interesting states where international migration has left a enormous void at home which eventually is being filled up by the Bihari migrants in Punjab. If the status of the Punjabi migrants have produced economically stable Punjabi population on the same time Bihari in-migrants population is left in lurch without making any socio- economic up gradation of Bihari migrants population back at home in the same proportion. Punjab economy striven well ahead of Bihar economy leaving a huge gap to bridge and to understanding the interlinkages of international migration and internal migration.
For many developing countries, remittances constitute a large source of foreign income relative to other financial flows. In 2009, in some countries economic remittances have “become as large as foreign direct investment” and, in a large group of developing countries, remittances represent a resource inflow that often exceeds a variety of other balance of payments flows
Their ability to reduce poverty and to promote human development is well documented and often reported as beneficial to overall development: “Remittances directly augment the income of recipient households. In addition to providing financial resources for poor households, they affect poverty and welfare through indirect multiplier effects and also macroeconomic effects.
Furthermore, remittances have been associated with increased household investments in education, health and entrepreneurship—all of which have a high social return in most circumstances. For instance, studies based on household surveys in El Salvador and Sri Lanka find that children of remittance-receiving households have a lower school drop-out ratio and that these households spend more on private tuition for their children. In Sri Lanka, the children in remittance-receiving households have higher birth weight and studies also indicate that remittances provide capital to small entrepreneurs, reduce credit constraints, and increase entrepreneurship.