Imagine this colossal sum is sent in bits each and every second 24/7 to all the poor countries from workers in more wealthy ones. I do not include a Brit who works in the US and remits money to his family in the UK and vice versa.
This allows the net recipient country to do many things they could not dream of doing otherwise. While it is apparent that much is remitted from the Oil Producing Countries where many work, which then allows the recipient countries purchase their oil, so it benefits the Middles East countries too as they are then able to sell their oil! You could argue then the worker goes for an oil for work bartering system! In fact that whilst our worker remittances, amount to about US$9B both through the banking system and outside, US$6B goes to pay for the oil. Arguably ALL the remittances from the Middle East goes to pay just for the oil we import from there!
In either case the past 30 years have seen a huge increase in this funds flow, that has enabled countries to develop, balance their current account, when the trade balance is in deficit, and avoid economic chaos. Just think for a moment if the 2M people with Sri Lankan passports returned to Sri Lanka today, could we cope with NO remittances, and having to support them? FAT CHANCE!
We will most likely be starving with no traffic on the road, not being able to import ANY fuel, and wondering what life is all about. We have taken this for granted, and most of the people do not realize how dependent this country has got from this. Worse still the benefit of the economic growth that comes from this appears foolishly to fall into the Government’s lap when one can argue that our growth would be more healthy if policies were different.
After all with this dependence on remittances, we have allowed our export sector to be decimated, by bad economic policy. If the govt. policies were different and export oriented we will be able to survive future balance of payments issues. The import substitution goals, whilst admirable, will come to grief when we produce items at home for 10times the cost if we were able to buy from abroad, and also if we used half that energy to produce an exportable unit to make that import purchase!
India’s and most other less well off countries have prospered and husbanded this windfall and put it to maximum use. Let us also not waste it and utilize it instead.