Remittances are funds that foreign workers send to their families to support them. The flow of remittances all around the world has increased in the previous decades especially for the developing countries. Developing countries like India, Pakistan, Bangladesh, Philippines, etc are the greatest remittance receiving countries as mentioned by different reports. This denotes that most of the foreign job opportunities are availed by people from poor countries who fail to get jobs in their own countries.
HOW REMITTANCES ARE USEFUL FOR POVERTY REDUCTION?
The importance of remittances is widely discussed in the context of poverty eradication because these funds have a crucial role in helping poor families. These funds not only benefit a single family but the advantages can be seen on the national level as well. Unemployment causes poverty and remittances to help to solve this problem. Remittances are used by families in order to fulfil their everyday needs.
When we go beyond the circle of family, remittances kept by families as savings can increase the investment in the economy which is the same as contributing to economic growth. Additionally, remittances increase the foreign reserves of a country and help the government to increase public spending. This contributes to the skill building of the poor class to efficiently contribute to the economy. Most of the economic benefits of remittances are discussed in the poverty reduction scenarios.