Remittances
Remittances: the international dimension
Remittances have begun to play an increasingly important role in the economies of many countries, greatly exceeding flows of development aid. Remittances contribute to economic growth in the receiving country, and help support large bands of of the population.
The overall effect of these flows on the development and economies of the countries concerned is difficult to quantify. But they most certainly have a positive impact in reducing poverty and improving welfare provision. They also improve the receiving countries’ ability to attract investment, even if these investments take the form of transfers of private savings.
In detail

Remittances as a share of GDP 2020
Remittances from Italy

Remittances from Italy in millions of Euros
Approfondimento
Remittances can create value
In detail
- constant growth in each stage of migrants’ integration;
- strong stability and low elasticity with respect to interest and exchange rates;
- remittances are sent, in most cases, to poorer segments of the population;
- remittances reach beneficiaries directly.
- remittances are first and foremost a source of subsistence and consumption for the immigrant’s family of origin. For this reason, any reduction in transfer costs and the possibility for the migrant to influence consumption decisions are two strategic factors.
- remittances can be a source of future consumption, especially with respect to education, buying a house and forms of social and pensions insurance. In this sense, the availability of suitable financial products (for savings and investment) and the ease with which the accumulated funds can be transferred are two factors of vital importance.
- remittances can become a resource to develop and support business activities in the migrant’s country of origin, and for trans-national business activities. But to channel remittances to enable access to credit by small- and medium-sized companies, new and appropriate instruments are needed.
- lastly, by funding community social projects, remittances can be an important resource for migrants to help support and develop their community of origin. At the same time, they nourish the migrant’s link with their home community and enable them to maintain their identity and roots. We need to create mechanisms that can act as catalysts and multipliers in this process.

Savings Allocation Process
Remittances and financial instruments
As we have already explained (see “Remittances can create value” fact-sheet), financial intermediaries, and financial instruments in particular, have the potential to channel and add value to remittances. Their effect can be seen on several levels. They can:
- ensure that resources are allocated to better effect;
- foster greater “ownership” of savings;
- support the immigrant’s integration process;
- support the development of the immigrant’s community of origin, and indeed their country.
In detail
- reduce immigrants’ financial vulnerability;
- provide access to payment services (in Italy and their country of origin);
- provide access to credit and other financial services (various forms of guarantees);
- add value to savings by providing an adequate return and fostering asset-building strategies.