WORKER'S REMMITANCES FROM ABROAD – INCREASINGLY IMPORTANT SOURCE OF DOMESTIC CONSUMPTION GROWTH

• Published in: Economic and Social Development: Book of Proceedings pp. 276 - 285
• Main Authors: Savic, Zvonimir, Misevic, Petar, Burilovic, Luka
• Format: Conference Proceeding
• Language: English
• Published: Varazdin Varazdin Development and Entrepreneurship Agency (VADEA) 24.10.2019
• Subjects: Consumption; Economic development; Economic growth; Economics; Emigration; Employees; Employment; Inflow; Labor market; Payments; Poverty; Remittances; Trends; Workers; Workforce; Latvia; Croatia
• ISSN: 1849-6903

All cashless payment orders related to the diaspora and resident natural persons from abroad are recorded in the balance of payments. They represent an important and stable source of funds, which is sometimes higher than the inflow of foreign direct investments. Those payments can have a significant impact on the reduction of poverty and can finance part of the economic growth of the recipient country. EU Member States with the highest inflows of payments of resident natural persons from abroad (worker's remittances) in comparison with the size of the economy are predominantly "new Europe" countries, which includes Croatia. Namely, Croatia has the highest level of inflows of payments of resident natural persons from abroad among EU Member States in comparison to the size of the economy. Worker's remittances reached EUR 2,4 bn in 2018, an equivalent of 4.7% of the national GDP. Although Croatia has always had a high level of worker's remittances from abroad in comparison to the size of the economy, more dynamic growth has been recorded in the last couple of years. That could be linked to the emigration growth after Croatia became an EU member state and to opening neighbouring labour markets due to the free movement of workers within the EU. Negative effects will be diminished if the emigration trend could be reversed into a trend of return of emigrants. In that respect, the return of a highly educated labour force could be crucial, since they will bring knowledge and experience gained in the more developed markets.