Remittances in Asia: Implications for the Fight Against Poverty and the Pursuit of Economic Growth

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Series is a forum for stimulating discussion and eliciting feedback on ongoing and recently completed research and policy studies undertaken by the Asian Development Bank (ADB) staff, consultants, or resource persons. The series deals with key economic and development problems, particularly those facing the Asia and Pacific region; as well as conceptual, analytical, or methodological issues relating to project/program economic analysis, and statistical data and measurement. The series aims to enhance the knowledge on Asia's development and policy challenges; strengthen analytical rigor and quality of ADB's country partnership strategies, and its subregional and country operations; and improve the quality and availability of statistical data and development indicators for monitoring development effectiveness. AbstractThis study examines the potential of remittances for promoting economic growth and reducing poverty in Asian countries using data for more than 20 countries in the region for 1988-2007. The results indicate that remittances positively affect home country real gross domestic product (GDP) per capita growth. A 10% increase in remittances as a share of GDP leads to a 0.9-1.2% increase in GDP growth. The findings also show that remittances only have a negligible effect on the overall poverty rate, but they tend to decrease the poverty gap and thereby ameliorate the depth of poverty. The estimates suggest that a 10% increase in remittances decreases the poverty gap by about 0.7-1.4%. The paper also explores the robustness of the key results by using 5-year average data and addresses potential endogeneity issues through instrumental variable estimation.It is also argued that foreign aid is not just a tool for promoting development but it has other objectives as well, such as being a sign of diplomatic approval or a reward to foreign governments for behavior desired by the donor. See Burnside and Dollar (2000) for more on issues related to foreign aid flows.

Nexus between Foreign Remittances and Economic Growth in Nigeria: Role of the Financial Sector

“…A number of studies have established a significant and positive impact of foreign remittances on economic growth irrespective of specifications used. For instance, Vargas-Silva et al (2009) reported that remittances had a positive effect on real gross domestic product per capita growth in the case of 20 Asian countries between 1988 and 2007. Other studies that have confirmed the positive relationship between foreign remittances and economic growth include, among others, Ahortor and Adenutsi (2009) Odionye and Emerole (2015) in the Nigerian context for the period of 1981 to 2011, and Meyer and Shera (2017) for 6 high remittances receiving countries between 1999 and 2013.…”

The Impact of Foreign Remittances on Poverty Alleviation: Global Evidence

“…In a study, Vargas-Silva et al (2009) tested the potential influence of remittances on alleviating poverty and spurring economic growth in Asia countries using data 20 countries during 1988-2007. The findings revealed that remittances merely have a negligible influence on the overall poverty rate, but they tend to decrease the poverty gap.…”

Remittances and Financial Development: Substitutes or Complements in Economic Growth?

“…Regression results for a panel of 84 countries in the period 1970–2004 show that the higher the ratio of worker remittances to GDP, the lower is the five‐year growth rate. However, Vargas‐Silva et al . (2009), using the same instrument as in Barajas et al .…”