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In many developing countries today, remittances – projected to reach USD 1 trillion annually before 2030 – already dwarf foreign investments and international aid as primary inflows of cash. Yet remittances are often overlooked in broader discussions on development financing, as they have been seen more as a direct injection to personal household income and hence an end in themselves. The link to the SDGs comes with SDG target 10.C, to remove inefficiencies in their transmission and transaction, rather than as a means to achieve the SDGs.
This is not to say that there isn’t a case here. In 2023, remittances amounted to $328 billion in Asia and the Pacific, often passing through intermediaries with high fees and complex regulations. However, it can also be more, with remittances playing a proactive role in reimagining economic policies and financing through domestic and global economic uncertainty.
As a recent illustration, remittances served as a stabilizer of household income, when other sources of revenue and local financing remain volatile during the COVID-19 pandemic. As job losses surged in major host countries for Asian migrants, remittance flows to and within Asia-Pacific surpassed expectations and were often life and livelihood-saving.
At the same time, some analysis indicates that a rapid flush of remittances into local economies pushes up prices for consumables, leading to local market distortions. While this may be the case and requires some regulatory safeguards on the pricing of essential goods, their growing volume and value during the last years in recent years cannot be underestimated. Today, they are an important flow of funds across developing countries, with 40% of global remittances flowing between developing economies[1], and could trigger greater south-south finance and trade cooperation and cross border efficiencies for mutual benefit.
A recent policy brief by the UNDP Regional Bureau for Asia and the Pacific highlights that remittances to the region now account for 38% of global remittance inflows in 2023. In absolute terms, India, China, the Philippines, Pakistan, and Bangladesh are the largest recipients of remittances. However, in relative terms, a significant portion of the GDP in countries like Tonga, Samoa, Nepal, Vanuatu, and the Marshall Islands comes from remittances. In Tonga, for instance, remittances account for over 40% of GDP since 2020.
While remittances reach some of the people who need them the most, further inquiry and analysis must focus on whether they are being leveraged to contribute to improving human development outcomes in each context. Given the often-hands-off approach of public policy, with a few exceptions, the jury is out on this one.
So, how can we support countries to harness the full potential of remittances for development financing? The following areas are worth exploring:
Addressing transfer bottlenecks along remittance corridors. Analyzing remittance corridors and financing flows sheds light on migration patterns and the obstacles migrants face in channeling resources back home. Reducing the cost of remitting money and improving corridor efficiencies can significantly enhance the livelihoods of migrants and their families. Unlike FDI, remittances directly impact local economies and, more critically, can strengthen economic and community ties across borders. But cost remains an issue, as exemplified by the Vanuatu-Australia corridor, notorious for its high transaction fees (12%), far exceeding the SDG target of 3%. Regional integration efforts like ASEAN also could benefit from reduced remittance costs across borders, making prohibitive charges like the average 12% fee for transfers between Thailand and Laos a thing of the past.
Directing remittances for early recovery and rebuilding. This source of funds has repeatedly shown to be a lifeline to vulnerable households during harsh natural disasters and economic downturns. The diaspora often acts as first solidarity responders, offering immediate and direct financial assistance to their families and communities back home. Given their countercyclical nature, remittances are hence remarkably resilient and flexible. thereby complementing international aid. Making remittances more accessible and affordable during crises will amplify their impact in such scenarios, providing immediate relief and supporting long-term recovery.
Where municipalities, private sector and philanthropy meet. Local government and city authorities, together with local private sector and philanthropy offer a combined untapped opportunity to guide and leverage remittances towards human development outcomes. By partnering locally, these actors could catalyze and incentivize each other’s roles and resources to provide a pool of locally available development funds, to improve essential infrastructure and services, invest in start-ups and local entrepreneurship, build future capabilities that will be transformative. For instance, “diaspora bonds,” issued by governments to nationals living abroad or to their descendants, are often offered at below-market rates. Diaspora bonds have shown to be most effective among large, financially stable diaspora populations with strong patriotic connections and trust in the issuing country organizations (India in the early 2000s).
Digital and tech innovation and crypto currency options. Digital innovation can revolutionize remittance transfers. Cryptocurrency and blockchain technology potentially offer more accessible and cost-effective means of transferring funds, with fees ranging from 1% to 3% for crypto remittances. The transparency and speed of blockchain transactions can ensure that funds reach recipients efficiently, reducing the risk of fraud and improving trust while potentially broadening access to financial services for underserved communities. This has its downsides and is viable only where the necessary regulatory safeguards are in place, so already vulnerable households do not lose more.
Reevaluating remittances for development can yield insights on policies and practice applicable across Asia and the Pacific, and beyond. With the development financing landscape continuing to shift significantly in 2025, this may be an area for more intentional and scaled remittances-for-development ‘live-streaming’ and not a moment too soon.
[1] World Bank (2025) reports that emerging markets and developing economies have increasingly contributed to global remittance outflows, rising to 40 percent during the period 2019–2023 from approximately 25 percent in 2000–2004, partly reflecting the growing migration of people to and from EMDEs.
A shorter version of this piece was originally published by Nikkei Asia (link).
