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Definition of remittances

Definition of remittances. Technical Subgroup on the Movement of Natural Persons (Paris, 31 January -2 February 2005). Overview. Policy context Definitions used in analytical studies Proposed alternative definitions for remittances Points for discussion. Policy context.

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Definition of remittances

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  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) US$125bn 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. 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) Definition of “remittances” -Narrow (1)

  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?

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