Definition of remittances

1
Definition of remittances

• Technical Subgroup on the Movement of Natural
  Persons
• (Paris, 31 January -2 February 2005)

2
Overview

• Policy context
• Definitions used in analytical studies
• Proposed alternative definitions for remittances
• Points for discussion

3
Policy context

• Worldwide remittances are very large in size (up
  to 20 of some countries GDP) US125bn or higher
  (???) match Foreign Direct Investment and
  exceed Official Development Assistance to
  developing countries
• Remittance flows are very stable
• Source of income for households possibly
  affecting poverty
• Interest in relation to trade policy (Mode 4 of
  the GATS)

4
Definitions used in studies

• Not clearly defined in analytical studies
• World Bank - GDF
• Workers remittances COE migrants transfers
• Anne Harrison DFID
• Workers remittances COE

5
What are we measuring?

• Flows from migrant workers long or short term?
• Flows received by households from related persons
  abroad ?
• Flows received by households from abroad
  regardless of the source (e.g. related persons,
  non-related persons, NPISH, government, etc.) ?
• Flows received from abroad and used by or for the
  benefit of households?

6
Definition of remittances -Narrow (1)

• Household to household transfers
• Excluding COE
• Including all transfers independently of
• Source of income (employment or other sources)
• From a migrant or not
• From a family member or not
• Purpose (gifts, alimony, etc. ) could be for
  investment
• BPM5 flows Workers remittances, Other current
  transfers and capital transfers (other than
  migrants transfers)

7
Definition of remittances -Narrow (2)

• Household to household transfers including COE
• Issues
• The worker is still a member of the household in
  the home country
• COE received by the household in the home country
  is NOT an actual flow
• Need to derive net COE (net of travel, taxes on
  income and social contributions to the host
  country)

8
Definition of remittances -Broad (1)

• Flows to households independently of the sending
  sector (e.g. NPISH, government, enterprise)
• Include
• Pensions
• Social benefits

9
Definition of remittances -Broad (2)

• Flows to households and NPISH independently of
  the sending sector
• Include
• Transfers to NPISH

10
Points for discussion

• Does the TSG agree with the definition of
  remittances in Broad (2)?
• If not, which definition would the TSG prefer?
• Does the TSG think that the definition of
  workers remittances should be clarified?
• Does the TSG agree with the concept of net COE
• Does the TSG agree that migrants transfer should
  not be included in the definition of
  remittances
• Does the TSG agree that capital transfers should
  be included in the definition of remittances?
• Does the TSG agree to include flows to NPISH be
  identified separately from flows to households
  and added to the latter for a more complete
  assessment of remittances?