Remittances Surpass FDI in Developing Nations

A groundbreaking report from the International Organisation for Migration (IOM) has unveiled a remarkable milestone; remittances sent home by migrants abroad have surpassed foreign direct investment (FDI) in developing nations for the first time. The report highlights that remittances surged by 650% from $128 billion to an astonishing $831 billion between 2000 and 2022, underscoring the significant economic impact of migration.

Despite initial concerns that the COVID-19 pandemic would dampen remittance flows, the growth trend continued unabated, defying predictions. The World Migration Report 2024 by IOM sheds light on how money sent home by migrant workers has become a vital source of revenue, surpassing international development aid to low- and middle-income countries.

In 2020, the top five remittance recipient countries were India, China, Mexico, the Philippines, and Egypt, with India and China leading the pack. The United States emerged as the top remittance-sending country, followed by the UAE, Saudi Arabia, Switzerland, and Germany.

The report comes at a critical juncture in Europe, where migration has been a contentious political issue. Home affairs ministers have initiated discussions on new migration laws aimed at managing irregular migration flows. However, IOM Director General Amy Pope emphasises the importance of strengthening legal pathways for migrants from poorer nations.

Pope shows the impact of legal pathways on reducing irregular migration, citing examples of Cuban, Haitian, and Nicaraguan migration to the US. Creating credible pathways for migration decreases reliance on smugglers and promotes safe and dignified migration.

In Europe, where ageing populations pose demographic challenges, there is a growing recognition of the need for migration. However, political sensitivities often hinder efforts to establish safe and regulated migration channels. The IOM report emphasises the importance of addressing visa restrictions and creating regular migration pathways for citizens of countries with low levels of human development.