Remittances to Asia plunged during the 1997 Asian financial crisis, but the drop was temporary as the flows were increasing once again after just 1 year. The current crisis, however, is fundamentally different in that even the countries that send remittances have been adversely affected. The global nature of this crisis raises several questions such as whether it will also last for a short time or developing Asia should prepare for a long period of remittance stagnation. This study examines remittances data to several Asian countries to shed light on such issues. The results suggest that while remittance flows to key recipients in the region have slowed down in the current year, there has not been a sharp drop. Furthermore, there is no indication that the remittance flows will slow down further, suggesting that the flows should be back on a higher growth path in a few years. It is unlikely, however, to see the same growth rates of the past, given that an important share of that growth during the last two decades was due to better recording of remittances and an increased use of wire transfers on the part of migrants.

This 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.

This paper examines the impacts of international remittances on household consumption expenditure and poverty in Bangladesh using computable general equilibrium modeling of the Bangladesh economy and microeconometric analysis at the household level. The former assesses the economic effects and distributional implications of remittances at the macro, sectoral, and household group levels, while the latter shows the association between remittances and household consumption expenditure, including poverty status. The first set of results shows that remittances have positive effects on the economy and they reduce poverty. The paper estimates that 1.7 out of the 9 percentage point reduction in the headcount ratio during 2000–2005 was due to the growth in remittances. A closer look at the household level further reveals the positive and significant impacts of remittances on the household’s food and housing-related expenditures. The impacts on education and health expenditures are also positive but insignificant. This implies a limited role of remittances in creating domestic demand for rebalancing growth and in developing human capital necessary to achieve the MDGs. However, results based on logit regression suggest that the probability of the household becoming poor decreases by 5.9% if it receives remittances, which further confirms the positive impact of remittances. Given that migration and remittances also bring costs to the society, the study findings call for policies to maximize their benefits. This includes attracting more remittances through formal channels and increasing their productive use.

This paper examines the impacts of international remittances on household consumption expenditure and poverty in Bangladesh using computable general equilibrium modeling of the Bangladesh economy and microeconometric analysis at the household level. The former assesses the economic effects and distributional implications of remittances at the macro, sectoral, and household group levels, while the latter shows the association between remittances and household consumption expenditure, including poverty status. The first set of results shows that remittances have positive effects on the economy and they reduce poverty. The paper estimates that 1.7 out of the 9 percentage point reduction in the headcount ratio during 2000–2005 was due to the growth in remittances. A closer look at the household level further reveals the positive and significant impacts of remittances on the household’s food and housing-related expenditures. The impacts on education and health expenditures are also positive but insignificant. This implies a limited role of remittances in creating domestic demand for rebalancing growth and in developing human capital necessary to achieve the MDGs. However, results based on logit regression suggest that the probability of the household becoming poor decreases by 5.9% if it receives remittances, which further confirms the positive impact of remittances. Given that migration and remittances also bring costs to the society, the study findings call for policies to maximize their benefits. This includes attracting more remittances through formal channels and increasing their productive use.

As one of the world’s largest recipients of remittances, the Philippines received remittances roughly 12% of its gross domestic product in 2008. Remittances have become the single most important source of foreign exchange to the economy and a significant source of income for recipient families. Using the instrument variable estimation technique, this study examines the role of remittances in increasing household consumption and investment and thereby their potential for rebalancing economic growth and creating long-term human and capital investment. The results indicate that remittances negatively influence the share of food consumption in the total expenditure. However, unlike previous studies, the estimations show that remittances to the Philippines do not have a significant influence on other key items of consumption or investment such as spending on education and health care. A further analysis using logistical regression shows that remittances help to lift households out of poverty. Remittances thus may help in fighting poverty in the Philippines but not in rebalancing growth, especially in the long run.

This paper investigates the role of gender in remittance behavior among migrants using data drawn from the 2004 Vietnam Migration Survey. The gender dimension to remittance behavior is not an issue that has featured strongly in the existing literature and our findings thus contain novel appeal. In addition, we use estimates from both homoscedastic and heteroscedastic tobit models to decompose the observed gender differences in remittances into treatment and endowment components. The paper finds little evidence that gender differences in remittances are attributable to behavioral differences between men and women. Instead, the empirical results show that endowment differences, such as gender differences in household head status and labor market earnings, are more important in explaining the overall gender difference in the remittance level.

It has been argued that the adverse impact of skilled versus unskilled labor migration can be mitigated or even offset by the fact that skilled migrants remit more than unskilled ones. This paper contributes to the much debated and so far unresolved related issue of whether remittances actually increase with migrants’ level of education. The determinants of remittances considered include migration levels and rates; migrants’ education level; and source countries’ income, financial sector development, and expected growth rate. The estimation takes potential endogeneity into account, an issue not considered in the few existing studies on this topic. Our main finding is that remittances decrease for migrants
with tertiary education. This provides an additional reason for source countries to prefer unskilled to skilled labor migration. Moreover, as predicted by our model, remittances increase with source countries’ level and rate of migration, financial sector development and population, and decrease in per capita income and expected growth rate.

The report provides an overview of labor migration from Pacific island countries and the remittances that follow. Remittances have always been and continue to be a major feature of the Pacific island economies. They ensure a balance of payment surplus in most receiving countries. The dependence on remittances, particularly of Polynesian countries, is controversial. Some economists consider reliance on these private flows of funds critical as it leaves economies vulnerable to fluctuations outside the control of governments. There is also very little understanding about the reciprocity triggered by remittances and its impact on the balance of payments and on the gross national product. The lack of reliable and accurate data on remittances renders it difficult to address these concerns. The situation is
further aggravated as remittances are underestimated due to informal unrecorded flows. Governments recognize the need for better data but are also aware of the sensitivity of these flows to official monitoring.