What is a Unilateral Transfer
A unilateral transfer is a one-way transfer of money, goods, or services from one country to another. The prefix "uni" means one. In a unilateral transfer, one party is making a transfer to the other party. They are not receiving anything back from the other party. Unilateral transfers often involve gifts to governments, foreign aid or any transaction where one party is promising to deliver and then delivering payments or items to another country, population or government without receiving anything in return. This can be contrasted with a bilateral transfer. The prefix "bi" means two. A bilateral transfer involves two parties exchanging goods, money or services.
BREAKING DOWN Unilateral Transfer
Unilateral transfers are included in the current account of a nation's balance of payments. They are distinct from international trade, which would be a bilateral transfer since two parties are involved in a trade. Unilateral transfers encompass things such as humanitarian aid and payments made by immigrants to their former country of residence.
Example of a Unilateral Transfer
For example, when the U.N. sends humanitarian aid to North Korea in the form of food this is a unilateral transfer. The people or government of North Korea are not sending anything back to the U.N. This is certainly not considered international trade. To contrast, a bilateral transfer or trade agreement with another country would involve one country sending goods in exchange for another country's goods.