The New Economics of Labour Migration and the Role of Remittances in the Migration Process



In 1995, international migrant remittances exceeded US$70 billion. How have these remittances shaped development in migrant sending areas?

Pessimistic views on migration and development pervade the literature. In contrast, the new economics of labour migration (NELM) argues that migration may set in motion a development dynamic, lessening production and investment constraints faced by households in imperfect market environments and creating income growth linkages.

This article assesses the development potential of remittances from a NELM perspective and cites empirical evidence that remittances may be a positive factor in economic development.

Governments in migrant origin countries may increase the development potential of remittances through a variety of economic policies. Creating a fertile ground for remittances to contribute to broad based income growth in migrant sending areas is a key to promoting development from migration.