Global remittances have become crucial financial lifelines connecting economies around the world. These transnational payments form strong economic links between developed nations and emerging markets and developing economies, facilitating the flow of capital across country boundaries.
Remittances are not simply private transactions between family or close friends. They’re an important contributor to economic growth and stability in many developing countries around the world. Remittances also provide direct access to the economic benefits generated in developed countries, creating pathways for sustainable development and poverty reduction in regions that need it most.
But, as we will illustrate here, these financial flows are playing a much larger and deeper role than just affecting individual households. They’re also determining whole economies of countries and regions.
What Are EMDEs?
Emerging markets and developing economies (EMDEs) represent nations in transitional phases of economic development. There’s an important distinction between the two main categories within EMDEs:
- Emerging markets are countries experiencing rapid industrialization and growth but haven’t yet reached advanced economy status. These nations typically have developing financial markets, increasing per capita income, and growing integration with global markets.
- Developing economies are at earlier stages of industrialization, often characterized by lower income levels, less diversified economic structures, and financial systems still in formative stages.
Key characteristics that define EMDEs include:
- Lower per capita income compared to developed economies.
- Higher growth potential than mature economies.
- Developing financial sectors with evolving regulatory frameworks.
- Increasing integration with global markets.
- Notable demographic advantages, such as younger populations.
- Higher risk factors, including political instability and regulatory uncertainty.
EMDEs have become an essential tool for international investors looking for growth opportunities in countries with known economic challenges, making information about their financial opportunities valuable for everyone.
Today, these economies are among the most dynamic markets in the world and are important engines of growth for the global economy.
EMDEs by the Numbers
Emerging markets and developing economies represent a significant portion of the global population and economic landscape. These nations span multiple continents and vary widely in their stages of development, from rapidly industrializing powerhouses to economies taking their first steps toward modernization.
Some prominent examples of EMDEs include:
- Brazil, Russia, India, China, and South Africa (collectively known as BRICS).
- Mexico, Indonesia, Nigeria, and Turkey (sometimes called MINT economies).
- Vietnam, Philippines, Bangladesh, and Kenya.
- Egypt, Pakistan, Colombia, and Peru.
EMDEs have become increasingly influential in the global economy:
- EMDEs are home to approximately 86% of the world’s population, which highlights their demographic significance.
- The performance of emerging market members of the Group of Twenty (G20) accounted for almost two-thirds of global growth in 2021.
- By 2035, emerging markets are projected to contribute about 65% of global economic growth, with an average GDP growth rate of 4.06% through 2035, compared to just 1.59% in advanced economies.
The collective economic significance of these nations continues to grow, making them attractive destinations for international investment and highlighting their importance as engines of global economic expansion.
What’s particularly noteworthy is how cross-border payments and financial connections between developed and developing economies have accelerated this growth trajectory, with remittances playing an especially critical role in this development story.
The Impact of International Remittances on EMDEs
Remittances have evolved into a critical economic lifeline for many emerging markets and developing economies. These cross-border financial flows represent much more than simple money transfers—they’ve become fundamental pillars supporting economic growth and stability across the developing world.
Recent data illustrate the profound impact of these financial flows:
- In 2024, India received an unprecedented 14.3% of global remittances, setting a historical record and strengthening its position as the world’s top remittance recipient.
- According to recent economic projections, Kenya is expected to outpace global GDP growth averages in 2025, with remittances playing a significant role in this economic expansion.
The significance of these financial flows becomes even more apparent when examining their proportion relative to national economies.
In many EMDEs, remittances represent between 5-35% of GDP, often exceeding foreign direct investment and official development assistance combined. This substantial economic input creates resilience during downturns and provides consistent capital inflows that support broader economic development.
As highlighted in the International Organization for Migration’s World Migration Report, these transfers create crucial economic bridges between diaspora communities and their home countries.
The volume of digital cross-border payments continues to grow annually, with global remittance flows reaching approximately $650 billion in 2024—a figure that demonstrates the essential role these transfers play in the global economic ecosystem.
Perhaps most interesting is how remittance patterns have shifted as economies have changed. Remittance senders in developed economies have a tendency to work harder during periods of downturn to maintain, or even increase, their support to family members in their home countries, which provides evidence of the extraordinary resilience of remittance flows even in rough economic times.
Benefits of Global Remittances in EMDEs
Remittances deliver multiple tangible benefits to emerging markets and developing economies through several key channels.
Household Income and Consumption
Remittances directly increase recipient household purchasing power, enabling better access to food, healthcare, and education. These transfers often represent a significant portion of family income.
Local Economic Impact
The benefits extend beyond individual households to strengthen local economies:
- Increased spending stimulates local businesses.
- Higher consumption generates additional tax revenue.
- Regular transfers promote financial inclusion and banking services.
- Remittance recipients frequently invest in small business development.
These economic ripple effects combine to create a powerful multiplier impact. Each dollar sent through remittances generates more economic activity within recipient communities. This transforms individual transfers into engines of collective growth and development.
Buffer During Economic Downturns
Remittances demonstrate remarkable counter-cyclical behavior, often increasing during recipient country economic crises when:
- Local unemployment rises.
- Government safety nets are strained.
- External economic shocks occur.
This stability was particularly evident during the COVID-19 pandemic, when many EMDEs experienced sustained remittance flows despite initial projections of steep declines.
Investment in Future Growth
Cross-border payments facilitate critical investments that might otherwise be impossible:
- Education funding creates human capital development.
- Housing investments build wealth and stability.
- Business formation generates employment opportunities.
These direct financial flows represent one of the most efficient mechanisms for supporting development, as they reach households directly without administrative overhead or political conditions that can affect other forms of international assistance.
Building Bridges to Prosperity
Remittances have changed from a mere money transfer to a potent force for economic transformation, especially in emerging markets and developing economies.
These cross-border financial flows create ripple effects that span multiple areas, supporting individual households, strengthening national economies, and providing a layer of resilience against economic shocks.
At UniTeller, we remain committed to facilitating these essential financial flows that connect the global economy and support millions of families and businesses worldwide. Our continued innovation in payment processing technologies aims to make cross-border transfers more accessible, affordable, and impactful for both senders and recipients. Learn more about how your business can leverage our international payment solutions.
