How does remittance work and help the economy?
In: Economics
Country A has lots of labour, some well trained and can speak the language of country B.
Country B has much higher wages, and a labour shortage.
Workers from Country A move to Country B to work, they send the money back to country A.
Country A benefits because it essentially exports a service (labour) and the cash inflow boosts the wealth of the country. Country B benefits because they are filing up the labour shortage and pay less for the workers.
Of course there are also drawbacks.
Country A could have kept its talented labour in the country and used them to grow domestic industries. Country B could have employed domestic employees who would spend their money locally instead of funnelling it overseas.
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