Private transfers, especially remittances,
can also provide income in rural areas. The
sums can be huge—an estimated $60 billion
in 2006 in Latin America alone—creating a
potentially large source of investment in
local economies. But transaction costs of
fund transfers are very high, often exceeding
20 percent. Reducing these fees by 5 percentage
points could generate annual savings
of $3 billion for workers sending money
home.60 Policies should be aimed at reducing
transaction costs on remittances and encouraging
investment in the local economy.