Migration has been an important issue in human history. In recent years, the pace of international migration has been phenomenal due to trade liberalisation, deregulation of restrictive measures and the development of transportation facilities, communication network and global cultural integration. As a result international migration has become a major concern for policy makers of labour sending as well as labour receiving countries. While countries are worried about the leakage of intelligence through migration, the contributions of international migration in the form of remittances to the economies of several less developed countries are worth noting. The remittances from migrants working abroad are important for both families of migrants and the balance of payment of their home country. While remittances contribute significantly to the welfare of the migrant households, it also has a considerable impact on GDP as well as foreign exchange earnings of developing countries. Remittances are now close to triple the value of the official development assistance (ODA) provided to low-income countries and comprise the second largest source of external funding for developing countries after foreign direct investment (FDI). Remittances have emerged as the least unstable source of financial flows for countries afflicted by shocks and constitute the single most important source of insurance for many poor countries. Evidence collected by the World Bank indicates that when a country encounters political or economic difficulties, citizens who are living and working abroad support their compatriots by increasing the amount of money they send. Against this background the present paper discusses various aspects of international remittances and its contribution to development finance.
Key words: International migration, remittances, economic impact, development finance.
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