The global recession of 2009 affected destination countries the world over, including those of the GCC. Regional variations in the expected response of remittance flows to an economic crisis abroad lead to an interesting question: why do the remittance receipts of some countries fall markedly during cyclical slowdowns or contractions in the major country/region of destination for their migrants, whereas no such decline is observed in the receipts of other developing countries facing similar external shocks? This paper argues that the key to answering this question may lie with the synchronism – or lack thereof – of upturns and downturns in the level of economic activity over the business cycles of countries at each end of a migration corridor, coupled with the predominant motive behind the remitting decisions of migrants.

Migration of natives who seek and find employment abroad reduces the high unemployment rates typically encountered by surplus-labor countries in the developing world. It also helps boost the household income of the families emigrant workers leave behind, as they remit part of their earnings abroad back home. The total remittances these emigrants send back to their countries of origin often reach sizable amounts, helping to relax the hard currency constraints facing these countries.

Official remittances receipts have become a more important source of foreign exchange than private debt and portfolio equity flows, official development assistance (ODA) receipts, and even foreign direct investment FDI for many developing countries.