No Easy Solution: A Smorgasbord of Factors Drive Remittance Costs
IMF Working Papers, July 30, 2021
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- No Easy Solution: A Smorgasbord of Factors Drive Remittance Costs
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Bibliographic details
- Authors: Tito Nícias Teixeira da Silva Filho
- Published: July 30, 2021
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513592954.001
Summary
- Author: Tito Nícias Teixeira da Silva Filho
- Publication date: July 30, 2021
- Series: Working Paper No. 2021/199
- Core summary:
- There has been a global push to decrease the cost of remittances since at least 2009, culminating with its inclusion in the Sustainable Development Goals in 2015.
- Despite new business models and policy efforts, remittance costs have been decreasing very slowly, contrary to predictions of sharp declines.
- Remitting to poorer countries remains very expensive.
- Academic interest on the drivers of remittance costs has been limited.
- The paper finds a complex, heterogeneous, and unequal remittances ecosystem where costs are driven by a myriad of factors and where there are no easy and quick solutions.
- Policymakers have limited room to act but still play a very important role.
Findings and analysis
- Ecosystem characterization:
- The remittances ecosystem is described as very complex, heterogenous, and unequal.
- Costs are driven by a myriad of factors; no single or obvious quick fix explains the persistence of high costs.
- Trend observations:
- Remittance costs have been decreasing very slowly despite sustained global efforts since 2009 and inclusion in the Sustainable Development Goals in 2015.
- Remitting to poorer countries remains particularly costly.
- Research gap:
- The paper notes a surprising lack of academic interest focused on the drivers of remittance costs.
Policy implications and recommendations
- Policymaker role:
- While policymakers face limited scope for action given the multiplicity of drivers, they still have an important role to play in addressing remittance costs.
- Implicit guidance:
- Because the environment is heterogeneous and drivers are multiple, policy responses should be tailored and multifaceted rather than relying on a single solution.
- Expectation management: quick and easy policy fixes are unlikely to deliver large, rapid reductions in remittance costs.
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- Working Paper