Remittance flows to developing countries: trends, importance and impact

Estimates of remittance flows to developing countries reached $406 billion in 2012 and are forecast to grow at a rate of 8% over the next two years. The aim of this chapter is to analyse the impact of remittances on recipient households and countries. We start by surveying the economics literature on the effect of remittances on poverty and consumption of remittance recipients. Next, we explore the recent evidence on whether and how remittances are invested in human capital and entrepreneurial activities. Finally, we discuss the likely impact of more stringent immigration rules and rising unemployment rates in developed countries on future remittance flows.