Remittances second only to FDI in developing countries

Washington, Aug 3 | Updated: Aug 4 2005, 05:30am hrs
Remittances from international migrants to their home countries, including India, are now the largest source of external finance for developing countries after foreign direct investment (FDI), the World Bank has said.

A study by the organisation found that in some cases, remittances were even larger than the official development aid. In 2004, remittances to developing countries exceeded $126 billionup nearly 48.7%, from 2001. Actual amounts were probably much larger because they often flow through informal channels such as hawala, eluding official data collection.

India received $17.4 billion during 2004, Mexico received $14.6 billion, The Philippines - $7.9 billion, China - $4.6 billion, Pakistan - $4 billion, Morocco - $3.6 billion and Bangladesh - $3.2 billion. The US was the largest source of workers remittances ($34.1 billion) followed by Saudi Arabia ($14.9 billion). They were followed by Germany ($9.9 billion), Switzerland ($9.2 billion) and France ($4.7 billion).

The impact of remittances varies, the Bank said. In Jalandhar district in Punjab, remittances received in the 1970s were put to production use and contributed to the green revolution in the state by enabling families to purchase tractors and machinery to increase agricultural production.