Dependence of third world countries on remittance

Third World countries are known as poor nations with underdeveloped economies. Economies of these countries are greatly dependent upon foreign funds and support. A form of such support is remittances. Remittances play a crucial role in the economies of some countries because of the influence the inflow of money has on growth. The economy runs on exports, public expenditure and business investment, but due to lack of advancement, they rely heavily on money sent home by foreign workers. These funds help the economic activity to boost on a family level as well as it also contributes to the overall national income.

Amongst major remittance recipients, India is the top remittance-dependent country among all, with a huge amount of $80 billion, followed by China ($67 billion), the Philippines and Mexico ($34 billion each), and Egypt receives an amount of $26 billion as remittance. Other Countries like Nepal, Bangladesh, India, Bhutan and several other third world nations also receive a sizeable amount of remittance that has a notable share in the economy. In 2010, Nepal was the most remittance dependent-country among third world nation, amounting 22.1% of the total GDP, followed by Bangladesh;10.8 per of GDP.

Today, more people are living outside their birth countries than ever before, supporting their families directly and contributing to their home countries in an indirect way. The capital inflow greatly contributes to the economy of the third world nations due to their dependency upon the rich countries in the world.