Any kind of taxation on migrant labour populations remittances (funds that emigrant workers earn and transfer to their home countries) news from say the GCC Countries as well as its potential impact on all recipient countries was a hot subject after the world’s oil and gas prices started dropping back in June 2014. In 2013, 15 million expats in GCC countries send home $80b in remittance every year.Taxation of foreign workers’ transfers of money in the Gulf countries begun to be debated as a potentially viable solution to address the respective GCC government budget deficits. So for the sending countries, the short-term economic benefit of taxing this outflow of funds could be somehow taken as some sort of shortcoming by the receiving countries.

The MENA region in this matter is interesting because it holds the top sending as well as top receiving remittances flows in the world.

For instance, the top 10 remittance recipient countries in the MENA were in 2015 Egypt with $20.4 billion, Lebanon with $7.5 billion and Morocco with $6.7 billion.

The top sending ones were in 2014/15, according to the local media Saudi Arabia with about $40 billion, the UAE with $29 billion and Qatar with more than $10 billion.

In 2012, the biggest recipient country was India with $70 billion followed by China with $66 billion and the Philippines with Mexico and Nigeria with more than $21 billion each. A small remark in passing is that the size of remittance flows to developing countries is now much greater than any official development funding. The picture however is not that positive onto both sets of countries socio-economic life as briefly noted below:

  • Outflow of workers from any country normally causes labour shortages with direct consequences on the local economy
  • Large inflows of remittances could affect the local currency exchange rate to appreciate

The proposed article of the following World Bank report although fairly exhaustive is as detailed and as comprehensive as one would want and it does nevertheless lead us to believe that remittances flows one way or the other is a fact of life that whilst sustaining the global economy, it is an increasing trend that is not relevant only to the MENA and the OECD countries. It is world wide and increasing.

Migration and Remittances

The number of international migrants is expected to surpass 250 million this year, an all-time high, as people search for economic opportunity. And, fast growing developing countries have increasingly become a strong magnet for people from other parts of the developing world.

In a demonstration of their economic footprint, international migrants will send $601 billion to their families in their home countries this year, with developing countries receiving $441 billion, says the Migration and Remittances Factbook 2016, produced by the World Bank Group’s Global Knowledge Partnership on Migration and Development (KNOMAD) initiative.

The United States was the largest remittance source country, with an estimated $56 billion in outward flows in 2014, followed by Saudi Arabia ($37 billion), and Russia ($33 billion). India was the largest remittance receiving country, with an estimated $72 billion in 2015, followed by China ($64 billion), and the Philippines ($30 billion).

“At more than three times the size of development aid, international migrants’ remittances provide a lifeline for millions of households in developing countries. In addition, migrants hold more than $500 billion in annual savings. Together, remittances and migrant savings offer a substantial source of financing for development projects that can improve lives and livelihoods in developing countries,” said Dilip Ratha, co-author of the Factbook.

The report provides a snapshot of latest statistics on immigration, emigration, skilled emigration, and remittance flows for 214 countries and territories. It updates the 2011 edition with additional data on bilateral migration and remittances and second generation diasporas, and recent movements of refugees, collected from various data sources, including national censuses, labor force surveys, and population registers.

It finds that South-South migration is larger than South-North migration. Over 38 percent of the international migrants in 2013 migrated from developing countries to other developing countries, compared to 34 percent that moved from developing countries to advanced countries.

The top 10 migrant destination countries were the United States, Saudi Arabia, Germany, Russia, United Arab Emirates (UAE), United Kingdom, France, Canada, Spain and Australia. The top 10 migrant source countries were India, Mexico, Russia, China, Bangladesh, Pakistan, the Philippines, Afghanistan, Ukraine, and United Kingdom.

Mexico-United States was the largest migration corridor in the world, accounting for 13 million migrants in 2013. Russia-Ukraine was the second largest, followed by Bangladesh-India, and Ukraine-Russia. The latter three are South-South corridors according to United Nations classification.

“There is ample research to demonstrate that migration, both of highly-skilled and low skilled workers, generates numerous benefits for receiving and sending countries. The diaspora of developing countries and return migration can be a source of capital, trade, investment, knowledge, and technology transfers,” said Sonia Plaza, co-author of the Factbook.