Remittances

Definition

Remittances are financial transfers made by migrants to their home country, usually to support family members or communities left behind. This economic practice plays a significant role in the livelihoods of many individuals and families in countries with large emigration rates, impacting both the sender and receiver through enhanced economic stability, improved living standards, and social change.

5 Must Know Facts For Your Next Test

1. Korean emigrants have historically sent remittances back home, particularly during significant waves of migration in the 20th century.
2. Remittances can significantly contribute to a nation's economy, sometimes exceeding foreign direct investment or international aid.
3. In South Korea, remittances sent by overseas workers have been vital for supporting families and driving local economies.
4. Technological advancements have made it easier and cheaper for migrants to send remittances quickly and securely across borders.
5. Remittance flows can help stabilize economies during times of crisis, providing a lifeline for families facing unemployment or economic downturns.

Review Questions

• How do remittances impact the socio-economic conditions in communities affected by Korean emigration?
  • Remittances play a crucial role in improving socio-economic conditions in communities affected by Korean emigration by providing families with essential financial support. This influx of funds can lead to better access to education, healthcare, and housing. As families receive money from abroad, they are often able to invest in local businesses and stimulate the local economy, creating a positive cycle of growth and opportunity.
• Evaluate the significance of remittances in the context of South Korea's economic development strategy over the years.
  • Remittances have been significant in South Korea's economic development strategy as they contribute not only to household incomes but also to broader national economic stability. By enabling families to afford education and healthcare, remittances enhance human capital development. Additionally, they provide necessary funds that can be reinvested into local economies, aiding in overall development efforts and reducing poverty levels within the country.
• Discuss the long-term effects of remittances on both sender and receiver countries in relation to migration patterns and community development.
  • The long-term effects of remittances on sender and receiver countries can reshape migration patterns and community development significantly. For sender countries like South Korea, consistent remittance flows may create dependency on these funds while encouraging further emigration for better opportunities. In receiver countries, remittances can stimulate community development by fostering entrepreneurship and improving infrastructure. However, this also poses challenges such as potential labor shortages and shifts in demographic dynamics as younger individuals leave for better prospects abroad.

Related terms

Migration:

The movement of people from one place to another, often for the purpose of finding better work, living conditions, or escaping conflict.

Diaspora: A scattered population whose origin lies in a separate geographic locale, often connected through cultural, social, and economic ties.

Economic development: The process by which a nation improves the economic well-being and quality of life for its citizens, often influenced by factors such as remittances.