Migrants Working Abroad Send $463 Billion In Remittances A Year — A Lifeline To Family Left Behind : Goats and Soda Remittances — money sent home by migrants working abroad — add up to more than triple the amount of official foreign aid to developing countries. And that makes some people unhappy.

Who Gives More To The Developing World: Aid Donors Or Migrant Workers?

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ARI SHAPIRO, HOST:

Millions of people around the world are migrating to other countries right now. When they reach their destinations and begin work, many of them will send money to their relatives back home in the form of remittances. Here in the U.S., remittances came into focus when Donald Trump said he would stop Mexicans in the U.S. from sending them unless Mexico pays for a wall on the border. Economist Dilip Ratha of the World Bank has just published a report on remittances and the global economy. Welcome to the studio.

DILIP RATHA: Thank you.

SHAPIRO: Broadly speaking, how important are remittances to the global economy?

RATHA: Remittances sent by migrants to their countries of origin are significant in size - $431 billion was the amount of remittances sent by migrants last year to developing countries.

SHAPIRO: $430 billion is something like three times the total international development aid in the world. That suggests remittances play an enormous role in helping poor countries develop.

RATHA: That is absolutely right. Remittances are more than three times the size of official aid provided by the donor countries. And unlike official aid, which must go through some agency, remittances directly flow from the migrant to the family member. The migrant also knows real-time what the needs are for the family. So in that sense, remittances are even more effective, dollar for dollar, than official aid.

SHAPIRO: What about when you look specifically at the U.S.? How much money left the United States last year in the form of remittances?

RATHA: You have about $56 billion flowing out of the U.S. every year?

SHAPIRO: $56 billion?

RATHA: $56 billion. And I probably misspoke when I said it flows out. It doesn't flow out. Actually, this is money earned by migrants from foreign country by providing work. They actually work very hard to earn that money, and then they consume in this country. Then, they pay taxes. And then, a little bit of money - 10 percent, 15 percent on average - is what they send back home. That amounts to about $56 billion, according to some count. But it could be actually more than a $100 billion by some other counts.

SHAPIRO: We hear a lot of concern in the U.S. that money that leaves the country in the form of remittances shouldn't leave the country and, instead, should be reinvested into the American economy. Is this a legitimate concern?

RATHA: The spending of one's own money - one has earned the money by working hard. And after earning that money, one should have the ability to do whatever with it that one wants to do with it, so it is a perfectly legitimate thing to do. And there is no sense of drain, as it is that there is no sense of drain when you buy an imported car are an imported shirt from another country.

SHAPIRO: You're saying nobody criticizes people for buying a German or Japanese car, so they shouldn't criticize people for sending money to family in Germany or Japan.

RATHA: Exactly.

SHAPIRO: I understand your education was partly made possible because you had a family member sending remittances back to India. Is that right?

RATHA: That is true. That is true. It is probably more the case that I was sending a lot of money home to help my brothers and sisters go through the education system. And indeed, had I not been able to earn money and send help to them to finance education, they probably would not have gone to college. In fact, as it turns out, my brother has a Ph.D., and my sister is also on her way to earning a Ph.D. now.

SHAPIRO: Dilip Ratha is the lead author on a new study of remittances in the global economy. He's an economist at the World Bank. Thanks for joining us.

RATHA: Thank you.

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