Remittances across national borders are very crucial when it comes to its
economic, developmental and cultural contributions to the sending and receiving countries. Remittances from migrants settled in another country have positive impacts on poverty reduction and development of the home countries and lead to the substantial achievement of their development goals. How? When the remittances are saved and invested in infrastructures and productive capacity.
Migrants transfer money online or offline through agents to their friends and family in their home countries. They spend this money on varying needs of the family such as:
- Long term household needs: Building a house, loan payments, productive investments, such as in business or real estate or agricultural assets and activities.
- Health and education: Medical services, insurance, studies and tuition fees.
- Home comfort: Home appliances, furniture, transportation facilities, telephone services.
- Direct household consumptions: Food items, medicines, rent, home services, such as electricity.
Thus, it can be said that the link between remittances and development outcomes comes in five key sectors: labour market, agriculture, education, investment and financial services, and social protection and health. Remittances enable households to make investments in human capital, as well as, development aspects of each country. Public policies can bring a noticeable change in the remittance flow and the remittance-driven investments.
It is true that remittances are private sources of money and the government cannot decide or control how people would spend their money. But government policy measures can play an important role in creating an environment for optimising the volume and the use of remittances. Government can ease the barriers to migration and remittance transfers in order to enhance opportunities for development and poverty reduction.
Government can:
- Ease financial transfers
- Set appropriate incentives
- Improve policy coherence in migration and remittances policies
- Facilitate temporary movement of people
If each government can bring about these changes in their measures and policies it can maximize the developmental impact of remittances. Money sent overseas through the best online money transfer in Australia can result in the better development of its receiving countries.
