How much economic impact do remittances have?

Each year, billions of dollars are sent by migrant workers to their home countries. According to the World Bank, in 2019 the total value of remittances reached a record $554 billion. 1 For some countries, remittances make up a sizable portion of GDP.

Why are remittances good for the economy?

Remittances help recipient households to increase spending on essential goods and services, invest in healthcare and education, as well as allowing them to build their assets, both liquid (cash) and fixed (property), enhancing access to financial services and investment opportunities.

Why are remittances bad?

Since the income of migrants has, in principle, already been taxed in the host country, taxing remittances amounts to double taxation for tax-paying migrants. Since remittances are usually sent to poor families of migrants, the tax would be born ultimately by them and therefore it is likely to be highly regressive.

What is the impact of remittances in the country’s gross national income?

Results of the analysis show that remittances have a positive significant effect on the Philippine economy in the long run. This translates to a 0.018\% increase in the economy’s gross domestic product when the remittances sent by overseas workers to the Philippines increases by 1\%.

What are the disadvantages of remittances?

Limitations of remittances

• A large outflow of workers from the home country can cause labour shortages, driving up wages and worsening competitiveness.
• Remittance incomes cannot be a large enugh substitute for well targeted overseas aid and private investment for infrastructure.

Are remittances good or bad for the economy?

Remittances can have both positive and negative effects on the economies of recipient countries. The transfers provide a country’s economy with foreign currency, help finance imports, improve the balance of payments in its international accounts, and increase national income.

How do remittances affect the Philippine economy?