Importance of Remittance in Economic Development
When there is need to send money home as a foreigner worker, there are a lot of modes that can be utilized by someone for this purpose and remittance is a famous one.
Basically remittance is the income earned by employees or workers in the country or state where they are not occupant and moved there just for job or business reasons. When they send their paychecks to home by using different money transfer services, the amount sent is recognized as remittance that can play a vital role in shaping the economies.
Often time remittance is also known as the transfers sent from the residents of a country to residents of another whether as gift or for fulfillment of an obligation.
In simple words, if you have foreign incomes or funds that you bring directly to your own country via bank or money transfer services, these can be called remittance and this article is all about the role of remittances in developing countries to help you understand the importance of remittance in economic development.
When someone receive some finances from a family member living or working abroad, it helps him or her to invest the money (after fulfilling personal needs) in different industries such as real estate, business or other profitable activities that increases the number and volume of investments in the country.
All the investment made can be seen as positive improvement in the earning of a person who is living in the remittance receiving state.
Receiving the remittance in bulk sounds like a lucky thing for financial development of the country as money is coming to home and there would be more chances to boost the national financial development in many ways.
Financial suffering in home country encourages the residents who are living and working in abroad to amplify the amount of money they remit each month, not only for the endurance of their families but for economic development as well.
Debts are reduced
Money that people receive in form of remittance helps them to pay their debts off soon even without paying increased interest rates.
Through this way, the banks or financial institutes would also be able to reduce the national debts as soon as possible for the better economic development.
In results, every resident of the country or state will be free from the overburden of debts, and there will be a sure increase in healthcare, education and housing investment from the end of government authorities.
Due to the hundreds of money transfer services and thousands of their branches around the globe, it is now very easy to send money abroad in order to increase the volume of remittance for your home country.
Since education is one of the aspects that contribute a lot in shaping the economies, it is much expensive in most of developing countries.
But, increased volume of remittance always helps the families to afford educational expenditures of their kids without getting loan or debts.
Improved social spending
As almost all commonplace expenditures and costs are always obligatory, funds received as remittance can also be employed to meet other vital social spending such as wedding costs and funeral related expenses etc.
The more remittances the foreigners will send to the home country, more their families develop and the economy as well.