The term third world countries are referred to the developing nations of the world which are going through a phase of difficulties regarding economy and growth. Hence, in current globalized world mutual relationships among countries has become obvious. The developed nations such as United States, Saudi Arabia, UK, Ireland, etc, play a huge role in the economy of third world nations like Pakistan, India, Africa, Bangladesh, etc in a variety of ways. Remittance is the funds transferred by people working abroad to their home country. These funds share a sizeable part of the GDP. Individuals or families privately transfer these funds to fulfill the needs of their loved ones or for other purposes like saving.
Remittances flow inside the country as capital that could, without any doubt, can contribute in order to boost the economy. How these funds can help to prosper the third world economy can be answered by a few roles of remittances below:
- Remittances helping families of poor people working abroad: The funds transferred by foreign workers help to stabilize the living standards of poor families and provide them the basic necessities like food, shelter, health, and education.
- Consumers buy goods: With these funds, people purchase goods which stimulate the overall economic activity of the country.
- Fuels the entrepreneurial activities: The funds which are kept in banks as savings can be provided as loans for investment in both large and small scale businesses.
- Stable nature: It has been found that these international money transfers remain stable even if there are conflict situations, economic busts, or other natural disasters.