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Improvement of Statistics on International Workers' Remittances

--International Discussions and Present Situation in Japan--

March 2006
Hidenori Satake*1
Michelle Hassine*2

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  • In recent years, there has been a heightened interest in cross-border workers' remittance, making this issue a subject of international discussion. Workers' remittances to developing countries exceed the amount of official aid and are comparable in amount to the inflow of foreign direct investment for those countries. As such, workers' remittances constitute an important factor in the economic development of developing countries. However, a review of workers' remittance data as recorded in balance of payments statistics points to several significant problems. Specifically, because of inadequate data coverage and narrowness of the scope of workers' remittances, the statistics do not fully meet users' needs. In light of this situation, the need to improve statistics on workers' remittances was brought up at various international meetings, such as the Sea Island Summit and G-8 meetings.
  • Data on workers' remittances in Japan's balance of Payments do not fully reflect the flow of remittances because the reporting threshold is set at a high level. Furthermore, workers' remittance data by country and region, which serve as the source data for the computation of current transfers, are not completely accurate because they are estimated based on the number of foreign residents in Japan. To resolve these problems, it is desirable to promptly improve the source data by lowering the reporting threshold and by collecting remittance data by country and region.
  • Workers' remittances are narrowly defined as "current transfers by migrants who are employed in new economies and considered residents there." Ongoing discussions in international meetings aim to revise the definition to cover all remittances made between households. Consideration is also being given to adopting a broader concept of "personal remittances" that would include other related transactions, such as compensation of employees and other household-to-household capital transfers. Japanese authorities should participate in these discussions and actively take part in the formulation of guidelines. Once such guidelines have been established, Japanese authorities should act to improve the usefulness of workers' remittance related data by reviewing the transaction codes in its present balance of payments data reporting system.

We are grateful to the staff of the International Department of the Bank of Japan for their useful comments. Any remaining errors are our own. The views expressed in this paper are those of the authors and do not reflect those of the Bank or the International Department.

  • *1 Bank of Japan, International Department
  • *2 Currently, International Monetary Fund


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