Remittances make foreign aid look like a paltry sum

The United States is a global leader it its foreign aid spending. It sends more than $30 billion in official development assistance, according to the Organisation for Economic Co-operation and Development. That is more than twice that of the next country, the UK.

Campaigners for foreign aid like to point out that the massive sum of US spending is less than 1% of the annual US federal budget. It is also small when held next to the $123.273 billion that foreign migrants send back home from the US in 2012. While attention is paid to the assistance given by governments to poor countries, individual remittances total more than $500 billion.

Supporters of more free migration rules often point to the vast sums that are sent back to families. Some professionals from parts of sub-Saharan Africa can send more money back home than they could have made if they stayed. As evidenced by the campaigning to prevent the shut down of remittance flows through the UK’s Barclays bank to Somalia, some families even rely up the money sent home as a major source of income.

The $69 billion that was sent back to India, an amount that likely had a much greater impact than the $4.86 billion that arrived in aid. The benefits also reach rich countries. Dozens of countries sent $4.5 billion in remittances back to the US, from Sudan to South Korea. However comparisons to foreign aid are not so neat. A working paper from Michael Clemens and Timothy Ogden for the Center for Global Development poses the idea that research on remittances has not been framed correctly.

They offer new questions that should be answered. It is based on re-calibrating the thought that remittances are aid and move it to the idea that they are a financial tool for individuals and families. Such a shift, they suggest, would lead to policies that would seek to free up the the constraints to remittance flows. For now, this interactive Pew Research map helps to visualize the flow of remittances in and out of countries.

Here are a few examples:

Remittances to Brazil
Remittances to Brazil

Japan and the US were responsible for nearly half of $4.936 billion sent back to Brazil in 2012.

Remittances to Kenya
Remittances to Kenya

Kenyans sent $1.23 billion in remittances back home in 2012. Nearly three quarters of the money came from the UK ($488 million) and the US ($315 million).

Remittances to Nigeria
Remittances to Nigeria

Nigeria saw the the $20.568 billion in remittances that entered the country in 2012 come from a variety of countries, including neighboring Chad where $1.39 billion was remitted, the third most after the US and the UK.

Remittances to India
Remittances to India

Some $69.35 billion in money was sent back to India in 2012. The majority came from the United Arab Emirates ($15.69 billion) and the United States ($11.96 billion).

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About Author

Tom Murphy

Tom Murphy is a Maine-based reporter for Humanosphere. Before joining Humanosphere, Tom founded and edited the aid blog A View From the Cave. His work has appeared in Foreign Policy, the Huffington Post, the Guardian, GlobalPost and Christian Science Monitor. He tweets at @viewfromthecave. Contact him at tmurphy[at]humanosphere.org.