Remittances Compared with Other Resource Flows Remittance Flows Are Large and Resilient US$ billions 680
FDI Remittances ODA Private debt and portfolio equity
580 480 380 280 180
08 20 0 20 9 10 e
07
20
06
20
05
20
04
20
03
20
02
20
01
20
00
20
99
20
98
19
97
19
96
19
95
19
94
19
93
19
92
19
19
19
91
80 0 –20
Resource Flows to Developing Countries US$ billions 1995
2000
2004
2005
2006
2007
2008
2009
2010e
FDI
95
149
208
276
346
514
593
359
—
Remittances
55
81
159
192
227
278
325
307
325
ODA
57
49
79
108
106
107
128
120
—
Private debt and portfolio equity
83
27
93
165
211
434
157
85
—
Sources: World Development Indicators database and World Bank Migration and Remittances Unit. Note: Private debt includes only medium- and long-term debt. FDI = foreign direct investment; ODA = official development assistance; — = not available.
Resilience of Remittance Flows Relative to Other Types of Flows during the Global Financial Crisis Despite a modest decline in remittance inflows to developing countries, these flows have remained more resilient compared with private debt and equity flows and foreign direct investment. There are several reasons for the resilience of remittances in the face of economic downturns in host countries: 1. Remittances are sent by the cumulated flows of migrants over the years, not only by the new migrants of the past year or two. This makes remittances persistent over time. If new migration stops, then over a period of a decade or so, remittances may stop growing. But they will continue to increase as long as migration flows continue. 2. Remittances are a small part of migrants’ incomes, and migrants continue to send remittances when affected by income shocks. 3. Because of a rise in anti-immigration sentiments and tighter border controls in the United States and Europe, the duration of migration appears to have increased. Those migrants staying back are likely to continue to send remittances. 4. If migrants do indeed return, they are likely to take back accumulated savings. This may have been the case in India during the Gulf war of 1990–91, which forced a large number of Indian workers in the Gulf to return home (Ratha 2003, 163). Also the “safe haven” factor, or “home bias,” can cause remittances for investment purposes to return home during an economic downturn in the host country. Migration and Remittances Factbook 2011
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