WASHINGTON - Migrant workers are expected to send home a whopping $225 billion this year, the World Bank said Monday, as a new study showed remittances playing a key role in slashing poverty rates in developing economies.
Worker remittances also increase spending in home countries on education, health and investment, the bank said. "Close to 200 million people are living in countries other than the ones in which they were born, and remittances are estimated to reach about 225 billion dollars in 2005," the Washington-based bank said, quoting from its forthcoming publication, Global Economic Prospects 2006.
"This makes remittances the biggest source of foreign exchange in many countries and has major implications for strategies to reduce poverty in developing nations," it said.
The Bangko Sentral ng Pilipinas (BSP) earlier said it expects remittances from Filipinos working overseas to hit $10.3 billion this year, up 21 percent from 2004.
BSP Governor Amando Tetangco told reporters remittances could rise further to at least $11.3 billion next year. BSP officials have said total remittances could be around 20 percent higher if informal transfers, such as money sent home through visiting relatives and friends, are accounted for.
Remittances help fuel consumer spending, which accounts for about 70 percent of Philippine gross domestic product.
The World Bank report, to be released in November, examines policy options to increase the poverty-reducing impact of international migration and remittances. The World Bank presented the findings in conjunction with the release on Monday of a new study, "International Migration, Remittances and the Brain Drain," produced by its research department.
It includes a detailed analysis of household survey data in Mexico, Guatemala and the Philippines -- all countries that produce millions of migrants -- which concludes that families whose members include migrants living abroad have higher incomes than those with no migrants. "The studies show that remittances reduce poverty and increase spending on education, health and investment," said World Bank economist Maurice Schiff, who co-edited the book with Caglar Ozden, also an economist at the bank.
He said the findings were consistent in all three country studies.
Further research is underway to see if they apply in other countries, he added. "The household survey evidence presented in the book demonstrates a direct link between migration and poverty reduction in the countries studied," said Francois Bourguignon, the World Bank's chief economist.
"It is groundbreaking work that is essential to sound policymaking in this area," he said. While remittances highlighted migration's positive impact on development, a more complex picture -- the so-called "brain drain" -- emerges when the study's focus shifted to the educated migrants from developing countries.
One chapter in the book unveiled "the most comprehensive database" to date, based on census and survey data from OECD countries, tracing a massive exodus of professionals from some of the world's most vulnerable low-income countries.
Eight out of 10 Haitians and Jamaicans who have college degrees live outside their country. In Sierra Leone and Ghana, the same ratio is five out of 10. Many countries in Central America and Sub-Saharan Africa, as well as some island nations in the Caribbean and the Pacific, show rates of migration among professionals over 50 percent.
This was in sharp contrast to much bigger countries such as China and India, from which only three to five percent of graduates are abroad, as well as Brazil, Indonesia, and the former Soviet Union, which also have low migration rates among the educated.
On a larger scale, the study showed that migration dramatically increased global economic output by enabling workers to move to locations where they were more productive, and as a result, earn much higher wages than they would have in their developing home countries.
A large portion of these economic gains accrues to the migrants and to their families back at home through the remittances they send, it said. (AFP)