International Migration and Technological Progress

Along with international trade and foreign direct investment (FDI), international migration is an important channel for the transmission of technology and knowledge. However, the direction and scale of technology flows that result from international migration are less clear than for FDI and trade. Remittances to developing countries have grown steadily in recent years, reaching an estimated $240 billion in 2007, and are now larger than FDI and equity inflows in many countries, especially small, low-income countries. Remittances can support the diffusion of technology by reducing the credit constraints of receiving households and encouraging investment and entrepreneurship. Remittance flows have also contributed to the extension of banking services (often by using innovative technologies), including microfinance, to previously unserved, often rural sectors.