In its annual Global Economic Prospects (GEP) report, the Bank said on Wednesday that the millions of dollars sent home by immigrants every year amount to double the amount of all government aid.
"With the number of migrants worldwide now reaching almost 200 million, their productivity and earnings are a powerful force for poverty reduction," World Bank chief economist Francois Bourguignon said.
"Remittances, in particular, are an important way out of extreme poverty for a large number of people," the French official said in the report.
"The challenge facing policymakers is to fully achieve the potential economic benefits of migration, while managing the associated social and political implications."
Officially recorded remittances worldwide exceeded $232 billion in 2005. Of this, developing countries received $167 billion, more than twice the level of development aid from all sources.
The report indicated that remittances sent through black-market or informal channels could add at least 50% to the official estimate, making remittances the largest source of external capital for many developing countries.
Echoing the recent Global Commission on International Migration report which wanted the economic role of migrants to "be recognised and reinforced", the GEP also notes that remittances and migration should be seen as a complement to local development efforts in low-income countries.
Officially recorded remittances
in 2005 exceeded $232 billion
"Migration," the GEP says, "should not be viewed as a substitute for economic development in the origin country as ultimately, development depends on sound domestic economic policies."
"Managed migration programmes, including temporary work visas for low-skilled migrants in industrial countries, could help alleviate problems associated with a large stock of irregular migrants, and allow increased movement of temporary workers," said Uri Dadush, director of the Bank's Development Prospects Group.
The countries receiving the most in recorded remittances are India ($21.7 billion), China ($21.3 billion), Mexico ($18.1 billion), France ($12.7 billion), and the Philippines ($11.6 billion).
Those for which remittances account for the largest proportion of gross domestic product are Tonga (31%), Moldova (27.1%), Lesotho (25.8%), Haiti (24.8%), and Bosnia and Herzegovina (22.5%).
"Migration should not be viewed as a substitute for economic development in the origin country as ultimately, development depends on sound domestic economic policies"
Global Economic Prospects report
Despite the emphasis on remittances from developed countries, remittances sent from developing countries - the so-called South-South flows - represent 30-45% of total remittances.
"Migration is truly a global phenomenon," said Dilip Ratha, one of the co-authors of the report.
"Many countries, both developed and developing, both send and receive migrants, and both send and receive remittances."