Get Remittances And The Problem Of Control - Econ Uchile

Remittances have grown to be a significant source of income for countless families all over the world. They provide a number of benefits, like enhanced financial inclusion and assistance for families, but they also have significant drawbacks, including hefty fees and fluctuating currency rates.

Poor migrant workers tend to be highly sensitive to the costs of remittances. A tax on remittances will drive these flows to unregulated, informal channels. That is likely to reduce the tax revenue, increase the cost of tax administration, and encourage informal channels of money flows, raising security risks.

More than 80 countries rely on remittances for at least 3 per cent of their GDP. These countries show that remittances are an engine of socio-economic growth and transformation, particularly for rural areas. Remittances can be costly to send but innovations, like blockchain and mobile money, can keep costs down.

The results indicate that while remittances have a positive impact on economic growth in developing countries with high human capital, they do not contribute to growth in developing countries with low human capital.

Although the impact of remittances on an economy is ambiguous, the effect on poverty is clearer. Remittances allow recipients to spend more on nutritious food or children's education. Another important benefit is allowing people to build up savings.

Remittances can pose money laundering risks, as funds related to illicit activity may go undetected due to the large volume of transactions or remittance providers' inadequate oversight of the various entities involved.

Remittances have grown to be a significant source of income for countless families all over the world. They provide a number of benefits, like enhanced financial inclusion and assistance for families, but they also have significant drawbacks, including hefty fees and fluctuating currency rates.

Remittances can reduce labor supply and create a culture of dependency that inhibits economic growth. Remittances can increase the consumption of nontradable goods, raise their prices, appreciate the real exchange rate, and decrease exports, thus damaging the receiving country's competitiveness in world markets.