The Effect of Remittances on Economic Growth in Kyrgyzstan and Macedonia: Accounting for Financial Development

Kyrgyzstan and Macedonia have experienced a reasonable increase in remittances over the last twenty‐five years. Subsequently, the extent to which remittances can be instrumental for economic development of the two countries has gained serious attention in recent development dialogues. The aim of this study is to examine the impact of remittances versus financial development on the economic growth of the two counties, complementing the burgeoning interest and focus on remittances for policy. The short‐run and the long‐run effects and the causality dynamics of remittances and financial development, are explored. The results show a long‐run positive impact of remittances on the economic growth of these countries. The impact of financial development is negative, significant only for Kyrgyzstan and not statistically significant for Macedonia. The causality results show that remittances support economic growth for Kyrgyzstan, whereas economic growth appears to propel remittances for Macedonia.     

The role of international remittances in health outcomes in Ecuador: prevention and response to shocks

This article evaluates the impact of remittances on health outcomes in Ecuador using an instrumental-variables approach. Although we do not find significant impacts on long-term child health variables, we find that remittances do have an impact on health expenditures, and on some preventive issues such as de-worming and vaccination. In addition, we find significant effects of remittances on medicine expenditures when illness occurs. In this regard, remittances are used for both preventive and emergency situations. Interestingly, we also find a significant and positive effect of remittances on health knowledge.     

Effects of Workers' Remittances and its Volatility on Economic Growth in South Asia

This study investigates the effect of workers' remittances and its volatility on economic growth of five South Asian countries by employing long time series data from 1975 to 2009. Cointegration results confirm a significant positive long run relationship between remittances and economic growth in India, Bangladesh, Sri Lanka and Nepal, but a significant negative relationship in Pakistan. Conversely, the volatility of workers' remittances has a negative and significant effect on economic growth in Pakistan, Indian, Bangladesh and Sri Lanka, but a negative but insignificant impact in Nepal. All sensitivity analyses confirm that the results are robust. A less volatile inflow of workers' remittances is growth‐enhancing for all countries. It is suggested that policy makers should make policies to reduce the transaction cost to welcome remittances into the region. Furthermore, countries like Pakistan should make the policies to discourage voluntary unemployment.

Policy Implications

• This study show the positive effect of remittances on economic growth in India, Bangladesh, Sri‐Lanka and Nepal. These countries should create friendly policies to reduce the transaction cost to ensure the continuous inflows of workers' remittances.
• Results indicate a negative effect of remittances on economic growth in Pakistan. Remittances are considered an uninterrupted source of income, which may increase voluntary unemployment, leading to decreased economic growth. The government should make policies to discourage this voluntary unemployment.
• Policymakers should create effective systems to ensure this inflow comes through formal financial channels for better control.

     

International Migration and the Role of Remittances in Eastern Europe

In this paper we analyse the effect of remittances on employment performance for Central and East European (CEE) economies. We show that the impact of remittances on unemployment depends on its effect on productivity growth and investment. In order to empirically analyse the impact of remittances we estimate a productivity equation using a set of 11 transition countries during the 1990 to 1999 period. Our results show support for the view that remittances have a positive impact on productivity and employment both directly and indirectly through its effect on investment.     

New Light on the Remittances‐Poverty‐Health Nexus in Macedonia

Macedonia receives about 10 per cent of GDP as cash remittances per year while a third of the population faces poverty. The study aims to investigate whether remittances improve the poverty and health of individual remittance‐receivers in Macedonia. To that end, we rely on the 2008 Remittances’ Survey and a sequential structural model linking remittances to social indicators. We find that remittances have a significant effect oto consumption, in particular health consumption, hence contribute to reducing poverty. In turn, improved health consumption significantly reduces the incidence of bad health among receivers. This finding lends support to the claim that remittances serve an informal social protection in Macedonia.     

Where do Remittances Go in Household Consumption? Empirical Evidence from Sri Lanka-Wide Micro-data

Private internal and international remittances are a major source of household money in Sri Lanka, yet their impact on household welfare has long been a research gap. Based on the Migration and Development Theory, this article examines how private remittances affect household expenditure behaviour, using nationally representative microdata and applying quasi-experimental methods. Private remittances have significantly increased household per-capita expenditure and initiated positive behavioural changes via increased allocations for basic needs, human and physical capital investment. Compared with internal remittances, the impact of international remittance shows a strong potential for reducing poverty incidence and improving people's well-being: households in richer/richest expenditure quartiles and urban households invest in education, which supports the country's long-standing record of education. Rural households demonstrate favourable changes in spending behaviour with receiving private remittances. From a public policy standpoint, government favours migration so that remittances are more likely to flow. A proper remittance-transfer mechanism to encourage smooth remittance is thus required.     

Worker Remittances and Capital Flows to Developing Countries

Worker remittances constitute an increasingly important channel for the transfer of resources to developing countries. Behind foreign direct investment, remittances are the second‐largest source of external funding for developing countries. Yet, literature on worker remittances has traditionally focused on the impact of remittances on income distribution within countries, on the determinants of remittances at a micro‐level, or on the effects of migration and remittances for specific countries or regions. Macroeconomic determinants and effects of remittances have received more attention only recently. Hence, the focus of this paper is on the macroeconomic determinants of remittances and on differences in these determinants between remittances and other capital flows. We find that remittances respond more to demographic variables while private capital flows respond more to macroeconomic conditions.     

The impact of migrants' remittances on the Egyptian economy

"The main objective of this paper is to evaluate the impact of the large remittances made by Egyptian migrants to their home country on the Egyptian economy. In order to study this impact, we use the implications of the standard Keynesian model. We estimated the structural equations of the model using annual data for the Egyptian economy over the period from 1970 to 1984.... The results suggest that remittances have had a strong positive impact on GNP in Egypt." The authors note that remittances especially affect private consumption spending. Policy implications concerning labor migration are discussed. (SUMMARY IN FRE AND SPA)     

Remittances: The Impact on Families in Armenia

Armenian families have a long history of receiving remittances. Currently remittances are a major component of the Armenian economy and have a significant impact on families. Utilizing the results of in-depth semi-structured interviews conducted in the capital city of Yerevan, this article examined how remittances affected the lives, well-being, and family relationships of the people who received them. As families managed without their migrant family members, they developed systems and routines that helped them cope with the absence. In addition, they utilized networks of social capital that allowed them to persist despite significant interpersonal challenges. Insights from this study will inform specialists who serve migrant families, helping them better understand what their clients are experiencing and enabling them to provide strength-based approaches.     

The new economics of labour migration and the role of remittances in the migration process

This analysis considers international migration remittances and their impact on development in migrant-sending areas. The new economics of labor migration (NELM) posit that remittances lessen production and market constraints faced by households in poor developing countries. The article states that remittances may be a positive factor in economic development, which should be nurtured by economic policies. The impact of remittances and migration on development varies across locales and is influenced by migrants' remittance behavior and by economic contexts. Criteria for measuring development gains may include assessments of income growth, inequity, and poverty alleviation. It is hard to gauge the level of remittances, especially when remittances may not flow through formal banking systems. The International Monetary Fund distinguishes between worker remittances sent home for over 1 year; employee compensation including the value of in-kind benefits for under 1 year; and the net worth of migrants who move between countries. This sum amounted to under $2 billion in 1970 and $70 billion in 1995. The cumulative sum of remittances, employee compensation, and transfers was almost $1 trillion, of which almost 66% was worker remittances, 25% was employee compensation, and almost 10% was transfers during 1980-95. Total world remittances surpass overseas development assistance. Remittances are unequally distributed across and between countries. Migration research does not adequately reveal the range and complexity of impacts. Push factors can limit options for use of remittances to stimulate development.     

Migration Plans and Received Remittances: Evidence from Fiji and Tonga1

This paper investigates the relationship between remittances and migration intentions in the source country using data from households in the Pacific island countries of Tonga and Fiji. Unlike previous research it accounts for potential endogeneity in the relationship between remittances and intentions and also includes households that receive remittances but do not have current migrants. We find a positive impact of remittances on intentions. The impact of remittances on intentions is stronger in a country with a longer history of migration and stronger in households with current migrants than those without migrants. These results provide new evidence on the role of remittances in the development of migration chains.     

International Migrants' Remittances and Welfare Status of the Left‐Behind Families in Turkey

In this study, micro implications of remittances are examined based on the data from the 1996 Turkish International Migration Survey (TIMS‐96), part of a comprehensive study of Eurostat and the Netherlands Interdisciplinary Demographic Institute (NIDI). Results of the study imply that migrant savings are generally used for satisfying basic consumption needs. Patterns of expenditures suggest that for 12 percent of all the households receiving remittances, about 80 percent used remittances to improve their standard of living. Considering the variation by regions, it is observed that households in less‐developed regions spent more on daily expenses than those in developed regions. This suggests that daily expenses of households in less developed regions depend significantly on remittances received by households. Moreover, remittances have a positive impact on household welfare; households receiving remittances are found to be better off than nonremitting households. This suggests that migration and remittances have positive indirect effects on incomes of emigrant households. A considerable part of the relevant literature argues that remittances are mostly spent on consumption, housing and land and are not used for productive investment that would contribute to long‐run development. This conclusion often rests on arbitrary definitions of “productive investments.” Access to better nutrition and allocation of more resources to education are, without question, forms of productive investment. Although emigration does not serve as a solution to the problems of national development, it is evident that remittances generate considerable welfare effects, at least for the remittance‐receiving population.     

International Remittances and Private Schooling: Evidence from Kerala,India

This study investigates the impact of international remittances on private school enrolment in Kerala. Using data from the 2010 Kerala Migration Survey and employing an instrumental variable (IV‐Probit) approach to address the endogeneity of migration, we found that remittances have a positive and significant effect on private school enrolment. After disaggregating the sample into different heterogeneous groups, we found that remittances have greater effect on boys, children residing in rural areas, and those belonging to socially advantageous groups and from higher wealth quintile. Children from lower wealth quintile and belonging to socially disadvantageous groups are least affected by migration and remittances.     

How Do Workers’ Remittances Respond to Lending Rates?

The literature on migrants’ motivation to remit ranges from self‐interest to altruism where studies analyse the impact from home country interest rates or interest differentials between home and host countries. We reinterpret the interest rate elasticity of remittances as a form of debt‐repayment responsiveness rather than based on opportunistic motivation. Modelling altruistic transfer and debt‐repayment, we find that, for a panel of countries, the long‐run responsiveness of remittances to changes in real lending rates is negative. This suggests that an expansionary (contractionary) monetary policy is most likely to lead to an increase (reduction) in remittances in the long‐run. In contrast to this, the short‐run impact of interest rate changes on remittances is positive.     

Migrant remittances in Greece and Portugal: distribution by country of provenance and the role of the banking presence

The article examines migrant remittances per country of origin of remittances for two emigration countries, Greece and Portugal. It also examines the relationship between remittances and the number of banks of the emigration country in the host country.
From the analysis it appears that remittances are concentrated in a small number of host countries – the US and Germany for the Greek case; France (mainly) and the US, Germany and Switzerland for the Portuguese case.
Remittances followed similar trends, characterized by especially high growth during the 1970s and also during the second half of the 1980s. For both countries similar trends are observed regarding the relationship between remittances and remittances per migrant with the presence of banks of the home country at the important countries of origin of remittances.
The growth of the banking presence in host countries had a significant impact on the growth of migrant remittances. However, remittances and migrant population are neither the unique nor main reason for banking expansion abroad. The common European financial and banking market is expected to play a major role in the banking presence abroad, particularly in European Union countries.     

Remittances in Ghana: Origin, Destination and Issues of Measurement

Few studies on remittances have focused on sub-Saharan Africa. This paper analyses a nationwide survey of 5,998 households to determine the characteristics of both internal and overseas remittances in Ghana. Particular attention is paid to the poverty-alleviation potential of remittances. Furthermore, this study uses a smaller scale pilot project with a matched sample of senders and receivers of remittances to identify some problems with using household-level surveys to assess the volume and impact of overseas remittances, and offers some suggestions as to how to handle these problems. The paper estimates that foreign remittances may be three times as large as Bank of Ghana estimates, bringing Ghana on par with large remittance receiving countries such as the Philippines and Mexico. The paper concludes that while foreign remittances are larger in value, locally sent remittances reach poorer segments of the population. Both foreign and local remittances are unevenly geographically distributed, being received more in the centre and southern regions than in northern Ghana where the poorest regions are. The paper argues a need to study multiplier effects of foreign remittances, as these can be large and eventually accrue to rural populations.     

What Drives Remittances from Saudi Arabia to Pakistan? Home Versus Host Country's Economic Conditions

Saudi Arabia is the largest source country of remittances to Pakistan since the 1970s. This study examined the impact of home versus host country’s economic conditions on remittances from Saudi Arabia to Pakistan. The ARDL bounds testing is used on the annual data set from 1973 to 2014. The study concluded that economic growth in the host country and economic crises in the home country increase remittances. 1% decrease in domestic output increases remittances by 2.79% while 1% increase in sending country’s output growth increases remittances by 5.2% in the long‐run. The bilateral trade has a positive while financial deepening has a negative impact on inflows. The impact of oil shock is insignificant. We suggest cautious foreign policy as remittances depend significantly on the host country’s economic condition that is not directly under the control of the home country but remittances can be sustained with bilateral trade.     

International Migrant Remittances and Labour Supply in Nigeria

The study analyses how remittances to Nigeria affect the labour supply of recipients using Propensity Score Matching (PSM) and a Log‐Linear regression model, with data from the 2013 Nigerian General Household Survey. The PSM results show that for the entire sample, the difference between the average amount of labour supplied per week by those that receive remittances and the amount they would have supplied without remittances is insignificant. The marginal impact analysis also shows that, ceteris paribus, the average labour supply for all recipients is inelastic to remittances. The results from the sub‐group analysis, however, show that receiving remittances negatively affects the labour supply of the self‐employed in agriculture, teenagers and the elderly. These results led us to the recommendation that policies to increase the inflow of remittances should be encouraged but in tandem with programmes to educate farmers on the benefit of investing remittances received in their farming business.     

Micro‐Level Determinants of Remittances from Recent Migrants to Canada

Despite considerable interest in remittances to developing countries, the limited availability of large sample data has constrained aspects of our understanding of remitter behaviour. This paper utilizes data from Statistics Canada’s Longitudinal Survey of Immigrants to Canada (LSIC) to investigate how the demographic characteristics of recent immigrants influence their remittance levels shortly after their arrival in Canada. We identify several hypotheses and use a Tobit model to estimate the impact of individual characteristics on remittance choices. As expected, remittances rise with incomes, age and falls with the size of the migrating family, housing costs and education. We also estimate how remittances are affected by other characteristics, such as gender, marital status, religion, region of origin, region of settlement and attitudes towards home and host communities.     

The Role of Migrant Remittances in Development: Evidence from Mediterranean Countries

Given the persistent problems in the balance of trade in LDCs, the limited effect of foreign aid, and the difficulties of borrowing, the often huge amounts of migrant remittances can substitute for the inadequacies of these forms of foreign exchange. As market flows of foreign exchange, remittances have complex positive and negative effects on development. In this paper, I deal with this role of migrant remittances in the theoretical framework of development economics, as related to the importance of foreign exchange as an indispensable factor of growth and structural change in LDCs. Various channels transmitting the impact of remittances on development are investigated based on the experience of countries from both sides of the Mediterranean basin.