How does remittance affect a country's economy?
Through the content of the article “How remittance helps economy in Viet Nam” we know that remittance not only helps Vietnamese people to upgrade to the next level but also supports the economy of Vietnam to develop
In this article, we will get more information about how remittance affects other developing countries’ economies and find out how blockchain makes sending remittances easier.
Top 10 nations which receive a great amount of remittance and how remittance affects developing countries.
10. Nigeria
Nigeria, which has the nickname “The Giant of Africa” is the 30th largest economy in the world and some of that economic boost comes from the remittance.
In September 2021, Nigeria had a remittance inflow of about $14.2 billion – according to Vanguard. This money comes mostly from the large diaspora population.
9. Germany
That is very surprising when Germany is on that table because it is a wealthy nation with a GDP of $3.98 trillion.
In the contrast with Nigeria, Germany’s remittance comes almost from Trading Economics, which amounts to about US $17.4 billion.
That isn’t shocking news because of the German-speaking part of Switzerland and the good trade exchange between Germany and the United States.
8. Bangladesh
The most attractive thing about this nation is its sightseeing on the beach. Many people choose Bangladesh as their second hometown, where they can enjoy the weather and develop the garment industry, which is a key export for Bangladesh.
7. France
Just like Germany, the reason why France is standing on this table is because of its Trading Economics and a small part is thanks to tourism.
6. Pakistan
This is a young nation due to its age population, which is almost under 22. Just like Nigeria, the Pakistani diaspora. Remittances into the country tally up to about $19.3 billion.
5. Egypt
This nation has one of the world’s oldest civilizations, which plays the best role in the tourism industry. Although the government of Egypt always tries to improve life in the country, Egyptians face increasing annual unemployment, poverty and income disparities.
In 2019/2020 increased the remittance in Egypt to $27.76 billion, accounting for nearly 10.4% of the GDP of this nation.
4. The Philippines
Here is it, one of the countries in Southeast Asia on the 4th rank of this table. Its economy is also buoyed by remittance inflows from overseas Filipino workers. The remittance of this country is around $31.4 billion in cash to the country.
3. Mexico
Mexico is the country that has the largest population of Spanish speakers in the world. In 2021, Mexico’s remittances hit a high of $51.6 billion and most of this came from the U.S. (nearly 94.9%).
2. China
This is not surprising that China is on the 2nd rank of this table. This country has the largest population in the world and its technology is on top of the world too with many billion dollars companies.
Remittances to China in 2020 were about 0.13%. Most of these remittances likely came from the U.S. and Hong Kong 14.85% and 15.42% in 2016, according to Statista.
1. India
If you are a fan of Bollywood, belly dancing, etc., you of course know about this nation, India. The economy of India depends largely on agriculture and tourism.
But, for Indians who live abroad, remittance is a big part of their immigrants’ lifestyle. In 2021, India received around 87 billion dollars.
Looking at the rankings above, we can see that, excluding the developed countries like Germany and France, from which the remittances come almost from Trading Economics, all these nations are developing countries or countries with a poverty rate still high.
Like Vietnam, remittances account for the majority of the country's GDP growth. This money helps not only to improve the lifestyles of the population but also to develop other sides constitutive of economies like agriculture, tourism and even technology.
How does blockchain make sending remittances easier?
The rankings above also show us how blockchain makes sending remittances easier. It’s not surprising when we can see India in the first rank. That is not only because of its population but also its technological development, especially in the blockchain and cryptocurrency area.
*A World Bank committee has suggested the benefits of Central Bank Digital Currency (CBDC) in cross-border payments.
The process of sending money to India using cryptocurrency is a lot more efficient and faster than the traditional method of approaching cross-border money-transferring agencies, and all transactions are accessible on the blockchain network from a regulatory standpoint.*
Moreover, traditional remittances and cross border payments also cost a lot of money. World Bank has found that depending on the destination country and the type of service utilized, a $200 transfer can involve typical costs ranging from 5% to 9.3%. In the third quarter of 2020, it was discovered that the global average cost of transferring $200 is 6.8 percent.
With the development of cryptocurrency, this cost will be decreased and maybe costless, because all of these transactions will be peer-to-peer and don’t need to go through a third party.
With these benefits, it can easily be realized that blockchain and cryptocurrency will be the best choice for remittances.