NCPA - National Center for Policy Analysis


February 8, 2010

Over the last half-decade, the money that migrants send home to their native countries has started to tell us something different: The United States is fast losing its monopoly as a prized destination.  Meanwhile, surprising countries such as Malaysia and South Africa are becoming the hottest new places to go for work.  The long tail of remittances points, as never before, to a new story: the unequivocal rise of the rest, say economists J. Humberto Lopez, Dilip Ratha and Sanket Mohapatra.  

For example: 

  • In 2001, the United States was the unchallenged remittance king, accounting for more than 30 percent of the money sent home from migrants working in top destinations -- those sending $700 million a year or more.
  • Just under a decade later, the United States represents a mere 18 percent of remittances among the same cohort; this is a dramatic drop even as the dollars leaving the United States steadily rose.  

So what happened?  The rest of the world caught up.  The top movers include Russia, Malaysia, Kazakhstan and Indonesia.   Meanwhile, the relative importance of remittances has also grown, say Lopez, Ratha and Mohapatra: 

  • In the last five years, they have begun to dwarf foreign aid coming from governments.
  • Today, remittances collectively account for three times the official financial assistance sent to the developing world; in some countries, the ratio is far higher.
  • Tajikistan's emigrants send home seven times what the country gets in aid.
  • Workers from countries such as Mexico, Nepal, Pakistan, Romania, Zimbabwe and Kyrgyzstan are probably doing more to help the poor than any global conferences or philanthropic ventures.  

The financial crisis has done more than any other event to expose the global economy's realignment, including shedding light on remittances.  But not all migrants have been hurt equally.  Countries with close United States ties have seen the flow of money dwindle, but South Asia, for example, where countries send a large number of workers to the Persian Gulf and other spots nearby, is doing just fine, say Lopez, Ratha and Mohapatra.  

Source:  J. Humberto Lopez , Dilip Ratha & Sanket Mohapatra, "Big Senders," Foreign Policy Magazine, January/February, 2010.

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