Remittances are inherently linked to migration. Migrant remittances, defined as transfers of funds from migrants to relatives or friends in their country of origin, have become an increasingly important feature of modern economic life.
Remittances are now recognized as an important source of global development finance. They provide much sought after foreign exchange to recipient countries, while supplementing the domestic incomes of millions of poor families across the world. Three factors explain the growing importance of remittances:
- Remittance flows are now the second largest source, behind foreign direct investment, of external funding for development countries;
- Remittances are one of the least volatile sources of foreign exchange for developing countries;
- Remittances are expected to rise significantly in the long term