While internal and international migration tends to be part and parcel of broader processes of urbanisation and rural development, remittance inflows to migrant sending localities and regions tend to accelerate and transform these same processes. First, remittance inflows tend to increase the share of non-agrarian income among migrant and nonmigrant households. Second, migrants often prefer to invest remittances in nearby urban centres, thereby reinforcing existing tendencies of urbanisation. Third, return migrants often prefer to re-settle in urban centres with their families while remittances can also finance rural-urban migration of family members for work or study. Finally, the aggregate positive effects of remittances on income and employment growth in migrant sending regions have transformed some regions into relatively prosperous areas.

For instance, de Haas (2007) found that in Morocco an increasing share of return migrants prefer resettling and investing in urban centres within migrant sending regions (rather than capital cities), due to the presence of public amenities, schooling, employment opportunities and the greater potential for investment. Through urban-based real estate and business investments, remittances receiving households simultaneously capitalize on, and actively contribute to, the accelerated urban growth and concentration of economic activities in migrant boomtowns, which have become destinations for internal migrants.

Remittances also tend to contribute to accelerating rural transformations, albeit in very heterogeneous ways. Whereas under favourable agro-ecological conditions, remittances have enabled migrants to modernise agriculture and invest in land and cattle, in other cases remittances have led migrant households to de-intensify or wholly abandon agriculture. Taylor et al (2006) found that in rural Guatamala remittances have permitted the conversion of rainforest into cattle pasture and also resulted in the accumulation of land in the hands of migrants.

In a study of migration and agricultural change in an Ecuadorian sending region, Jokisch (2002) found that remittances have neither led to agricultural abandonment nor to agricultural improvements. However, large investment in housing converted much of the region into a peri-urban landscape of cultivated real estate. In some Moroccan rural regions, remittances have enabled investments in modern irrigated agriculture, whereas they have triggered abandonment in other regions (de Haas 2007). The same evidence from Morocco also suggests that agricultural production may decline in the short term as a result of the lost labour effect, whereas in the long term effects may be positive after agricultural systems have readjusted and migrants start to invest. This seems to be corroborated by a study of the effects of temporary labour migration from five African countries to South Africa’s mines on agricultural production in countries of origin, in which Lucas (1987) finds that migration diminishes domestic crop production in the short run, but enhances crop productivity and cattle accumulation through invested remittances and increased domestic plantation wages in the long run. These findings demonstrate that the impact of migration and remittances should not been seen through a short-run lense, but should instead be studied with a longitudinal perspective.

There is a great need for research on interactions between international and internal migration, including the role of remittances in possibly facilitating a shift from rural to urban sectors. In fact, a lack of longitudinal data on migration and urban-rural transformations has hindered research in this area to date, and this seems to be a priority area for future research.