Workers' Remittances: An Important and Stable Source of External Development Finance

This paper examines the relative importance of workers' remittances as a source of development finance, and discusses measures that industrial and developing countries could take to increasing remittances. The main topics that the paper discusses are:

• Remittances are the second-largest source of external funding for developing countries;
• Improvements in policies and relaxation of foreign exchange controls may have encouraged the use of remittances for investment;
• By strengthening financial-sector infrastructure and facilitating international travel, countries could increase remittance flows, thereby bringing more funds into formal channels;
• Facilitating international labor mobility is a crucial means of increasing remittance flows to developing countries.

The paper:

• Analyzes trends and cycles in workers' remittances in developing countries and compares them to other sources of foreign exchange earnings, such as exports, private capital and official flows;
• Examines the impact of remittances on growth, investment and income distribution in recipient economies;
• Discusses means of strengthening the infrastructure for sending remittances;
• Deals with international migration - the precondition for remittances.

The paper also includes information about:

• The role of Mexican consulates in boosting remittances;
• Financial fairs that promote remittances and good banking habits among migrants;
• The increasing pressure of world migration.

The paper concludes by outlining the near- and long-term viewpoint for remittances to, and migration from, developing countries.