In a larger context, economic sustainability refers to practices that support long-term economic growth without negatively impacting the social, environmental, and cultural aspects of the community. In developing circumstances, remittances represent a significant share of the recipient’s household income. The majority of remittances are used for consumption, but a share of them is also used for investing in human and physical capital and for business creation. In such cases, remittances serve as a rather important part of economic sustainability globally. International remittance flows have proven their resilience through the Covid-19 pandemic–induced economic crisis in spite of initial expectations forecasting their decline in countries. This calls for some reflection on the nature and behaviour of the flows, with a particular focus on aspects that might explain their countercyclical behaviour and distinctive patterns. - (The role of remittance in promoting sustainable development – European Parliament).
Here we discuss economic sustainability in a larger context. It is rather obvious that geopolitical tensions and the global economic slowdown have made economies more inward-looking. The sustainability of trade must remain a fundamental objective of the international community to ensure long-term economic growth and value creation. This year’s STI (Sustainable Trade Index), developed in partnership with IMD’s (Institute for Management Development) World competitiveness center, examines the key factor affecting these trends. A combination of technological innovation, robust macroeconomic fundamentals, and an open trade environment underline the performance of countries at the top of the pillar rankings. Results among the top five economies show that a healthy population along with educational achievement in combination with social mobilitycharacterize high-performing economies. Top economies also strive to reduce their carbon dioxide emission and related externalities and ratify relevant environmental conventions. They also show the effects of reducing their energy consumption and their emissions. -(Sustainable Trade Index 2022-Hinrich Foundation).
Undoubtedly, remittance plays a role in promoting sustainable development. As such, context-appropriate policies are required to leverage the development impact of each remittance corridor in terms of location, transfer channels sender and recipient profiles, and use by recipients. Thought should also be given to the impact of poverty reduction; protection against shocks and an increase in the ability to invest in human and physical capital. Overall, a holistic vision must be maintained to allow for a complete understanding of this complete phenomenon. Political actions for strengthening the role of remittances on development have so far mostly focused on reducing the costs of sending money through formal channels, but the overall landscape of responses is still fragmented, insufficiently developed, and has significant challenges. This can be overcome if the corporate remittance industry can synergize with the governmental body concerning sustainability to come up with an action plan to improve sustainable development in such a context, aside from just reducing the sending cost.
However, there area few policy responses for strengthening the remittance development nexus. The Sustainable Development Goals are at the cost of transferring remittances to less than 3% in 2030 (The role of remittance in promoting sustainable development – European Parliament). Political initiatives for moulding the use of remittance once received are rather scarce compared to those that aim at reducing the sending costs. The cost of transferring money overseas has been decreasing for several years. The decline accelerated during the Covid-19 pandemic due to the sudden digitalization of a great share of remittances. The main obstacles to a further reduction are the lack of transparency on transfer costs, the shortage of competition in the financial market, and the recipients’ low level of both financial inclusion and digitalization as a result of the lack of digital infrastructure and capacities.
Conclusion
In conclusion, remittance plays a trivial role in economic sustainability as it can improve and as well decline a county’s economic state with money inflows and outflows. As such it is important to invest and look into strategies and policies that can promote economic sustainability as a whole.A few of the policies mentioned above aid in strengthening remittance development in a sustainable way. Sustainable development is a venture that is relatively new andone that needs more focus and research. Here at Lotus Remit, we are all for sustainable development. Though we know it is easier said than done, we do our best to contribute our part in sustainable development by keeping up with digitalization and investing in necessary infrastructure and needs. As mentioned above, we also stand to have a complete transparency policy with all our costs for the best interest of our clients and the business. With all the current initiatives in place, we understand that sustainability acquires constant research, development, and practice. Hence, constantly working on improving sustainable development in ways we can.