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Question

Analyse how having some of its population working abroad may benefit an economy.

Quick Answer:


Having some of its population working abroad may benefit an economy in several ways.

The government may save on unemployment benefits
More people working abroad will reduce unemployment if the workers’ skills are not in demand at home. Furthermore, the workers may send income home, helping to support dependents.

They may gain skills abroad and if they return they will increase the productivity of the labour force.
Labour productivity (the productive use of labour) is a key determinant of economic growth. This is determined by several interrelated factors, such as the qualifications, experience and training of the labour force. This can be acquired abroad, in developed countries for example Firms may be able to reduce their production costs and increase output.

The current account position on the balance of payments will improve
The money they sent back will be an inflow of foreign currency. Transfers by private individuals are also included in the current account. One such transfer is workers’ remittances. This transfer of money from people working in a foreign country back to their relatives at home forms a large credit item in the case of some countries.

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