Posted by Sandy Warren on Sep 10, 2018
Remittances Constitute a Significant Part
of National Economy for Many Countries
Dr. Sabith Khan, Assistant Professor in the School of Business at California Lutheran University, spoke to members and guests of Ventura Rotary South on Monday, September 10. His topic, "Remittances and International Aid," highlighted the significant amount of money that flows between nations of the world through remittances, which are generally defined as regular payments sent by migrant people in one nation to family members or friends in their country of origin. Such payments include money for consumables, health care, education, home building and other basic needs.
"Remittances are a lifeline for many people," said Sabith. "They play an important role in the development of families, communities, and even countries." He noted that, of the 232 million international migrants, approximately 180 million regularly send money to people their homelands, and those payments average roughly $200 per month. In 2013, international migrants sent $413 billion to families and friends, an amount three times greater than the total of global foreign aid that year.
Sabith explained there are numerous benefits to remittances. Among the examples he cited were the reduced school dropout rate in El Salvador and a decrease in Nepal's poverty rate from 42% to 31% from 1995 to 2005. He noted that India ranks first in remittances, receiving $72 billion in 2014, an amount larger than its information technology product exports. India is followed by China, the Philippines, Mexico and France.
Sabith also noted that there are barriers to remittances, including the fact that sending money internationally can be costly, from an average of 8% to most nations up to a staggering 90 percent when money is sent to countries in crisis, such as Venezuela. There are also government sanctions and restrictions to deal with, as well as the threat of money laundering in some areas of the world. In spite of that, remittances continue to be a beneficial and growing contributor to the global economy.