The remittance industry has been trending in the new era. Rising numbers of foreign remittances are a boon to the receiving country’s economy at both large and small levels. Especially for the developing countries like India, Pakistan, Bangladesh, Sri Lanka etc. remittances play an important role as a stable source of income. International money transfer significantly contributes to the development budget of a country.
At the micro-level, remittances have a positive impact on the health care, business, education, and the overall economic development of the receiving families. As families are the real beneficiaries, a number of economists argue that remittances have a positive impact on the country as it is not diluted with any kinds of corruption from the part of government agencies.
On the macro-level, remittances do significantly increase the economic output of a country. They can increase the level of material and human resources – which are core factors that contribute to long-term growth. More entrepreneurship and business pursuits with remittance money can create more job openings which help to eradicate poverty at a lower level while driving economic growth at a higher level.
Yet, one of the potential negative impacts of foreign remittance is a culture of dependency. When cash flows into a family on a regular basis, even the younger and healthy family members may choose not to work or work less voluntarily. This can affect the labour market and GDP of the country. However, upon balancing the effects of foreign remittances, it always holds a positive edge for the betterment of a country’s economy.
Again, all the impacts and long-term growth of a country’s economy depends from country to country, as they have different rules and policies on remittance. Simpler, liberal and less expensive transfer policies of the host country can encourage more remittances, continued product growth and sustainability in the economy. The more a country allows in-store and online money transfers, the better it is for the country’s economic growth and living standards.
