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Remittances and Development

“Remittances facilitate human capital formation mainly by improving access to education and health. They also lead to an increase in investments and the reduction of poverty, particularly within recipient households. Remittances have also been critical sources of foreign exchange for the national accounts and have been found to promote macroeconomic stability”.Indeed the burgeoning volume of international remittances has emerged as a potential source of funds for development activities. Remittances-a portion of the wages of migrant workers earned in foreign countries and sent back to their home country-are a strong source of foreign exchange for labour sending countries, used to pay import liabilities , improve the balance of payments, build foreign exchange reserves, service external debt, and enhance the viability of the recipient countries external sector. On the domestic front, remittances increase the household incomes of migrant families, improve living standards, enhance savings, and generally contribute to national economic growth. However, the contribution of remittance to development can be categorized into following two ways:
              1. Remittances and the Micro-Economic Development
              2. Remittances and the Macro-Economic Development