Remittance income is money that is sent internationally to family members after an individual leaves their country of origin to find work abroad. In some countries, remittance income accounts for a substantial portion of a country’s source of wealth (Seear, 2007). This interactive tool provides a very interesting way to explore the exchange of remittances across the world. It is obvious that the individuals as well as the country receiving the remittances are benefiting from the exchange, For example, remittances were responsible for 39% of Tonga’s (a small south pacific group of islands) gross domestic product in 2002, money which is often used to fund education, health programs and public infrastructure (Ratha, 2002). Although this exchange of money across countries has many benefits for the recipients, unfortunately it can also prove to be quite detrimental.

One foreseeable issue pertaining to the exchange of remittances would be that it creates an indirect degree of dependency on the economies of other countries. In our global health promotion class we often talk about the lack of sustainability and ineffectiveness of foreign aid projects where work is done to or for struggling countries, as opposed to working with the country and its citizens. This concept applies to remittance exchange because although money is being infused into the developing countries and their economies, the economic structures, social injustices and inequities which originally caused the poverty are not being directly addressed.

Moreover, studies suggest that since international migration is a rather expensive endeavour, it is the more affluent households that are able to finance migrants who in turn transfer the remittances back home. By contrast, poorer households being held back by rural poverty and labour-replacing methods have no prospect of engaging in such undertakings. (Adams & Page, 2005). In essence, social inequities may be even further developed by the existence of migration and remittances, hence the rich get richer while the poor get poorer.

Although remittances are beneficial to many individuals, sadly it is not a long term solution to poverty in developing countries. Unfortunately, for those receiving the remittances the money may be crucial to their survival; however, over time it may prove to be more of a hand out rather than a hand up. Furthermore, for the migrating individuals the stress associated with immigration coupled with the financial responsibility of those back home may cause undue harm to their potential for success. Refocusing efforts on building more sound economic policies and strategies in the countries of origin would undoubtedly be a more productive and sustainable solution to the complex issue of poverty.

References

Adams, R. H. & Page, J. (2005). Do international migrations and remittances reduce poverty in developing countries? World development, 33(10), pp. 1645-1669. doi:10.1016/j.worlddev.2005.05.004

Ratha, D. (2002). Worker’s remittances: an important and stable source of development finance. [PDF Document] Retrieved from http://www1.worldbank.org/prem/prmpo/povertyday/docs/2003/ratha.pdf

Seear, M. (2007). Foreign aid projects large and small. An Introduction to International Health. (pp. 143-164). Toronto, ON: Canadian Scholars’ Press Inc