Migration and development have become a key area of study, particularly regarding the impact of remittances on poverty reduction, economic growth, and household welfare in countries where migrants originate. Foreign-earned income sent back home, financial transfers from migrants to their families back home, have been found to play a crucial role in alleviating poverty and enhancing quality of life. Research has demonstrated that foreign-earned sent back home can reduce poverty rates by increasing household income and enabling families to invest in essential services like education and healthcare. Additionally, foreign-earned sent back home can contribute to economic growth by stimulating local economies and improving entrepreneurship. However, the impact of foreign-earned sent back home on development is not without challenges. Dependence on foreign-earned sent back home can create vulnerabilities to external economic shocks, and the flow of foreign-earned sent back home can be affected by factors like migration policies and economic conditions in receiving countries. Notwithstanding these obstacles, foreign-earned sent back home remain a vital source of external financing for many low income countries. Strategies focused on reducing transaction costs, improving financial inclusion, and promoting investment in productive sectors can help maximize the foreign-earned sent back home development benefits. Overall, foreign-earned sent back home have the potential to improve significantly to poverty reduction, economic growth, and household welfare in destination countries. By comprehending the subtleties of foreign-earned sent back home flows and implementing effective policies, governments can improve the development potential of migration.
Asante et al. (2025) studied this question.