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Outline
1. Overview of remittances data for Asia
2. Review of literature/evidence on impacts of
remittances on growth and poverty reduction
3. Transmission of remittances on economic
activities
4. Are remittances win-win for host and home
countries?
5. Unofficial vs. official channels for remittances
6. Conclusions
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Growth
Remittances have consistently grown faster than GDP
2. Review of literature/evidence on
impacts of remittances
Consumption: some impact on food spending
Investment: mixed evidence on impacts on
education, health and housing
Growth impacts: evidence mixed
Some find positive effect, others not
Problem of simultaneity
Impact of volatility also mixed
Investment (Yes)
A number of studies find increased spending on health
care, education and housing
Some find increased investment in human capital and
entrepreneurship in home country
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3. Transmission of Remittances on
Economic Activities
Aggregate Demand Effect
Remittances Households Income Consumption Increase in sales
Increase in sales of companies Increase in investment
Y = C + I + G + EXP IMP
Y=AxF(N,K)
Home country
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5. Conclusions
Remittances very important for a number of Asia-Pacific
economies
Evidence on impacts is mixed
Both home and host countries benefit, i.e., win-win, but may
need protection measures for migrants
More efforts needed to reduce transfer costs
Need to provide expanded investment/savings opportunities
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Background Information
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Studies
Ang, et al (2009) (Philippines), Adams
and Cuecuecha (2010) (Guatemala),
Adams (2007) (115 developing
countries)
Viet (2008) ( Viet Nam)
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Studies
Shock transmission
Remittances can be a source of output
shocks.
Remittances can help reduce the probability Bugamelli and Patern (2005)(110
of current account reversals.
developing economies)
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Source: Authors compilation
Remittances increase inequality, albeit only slightly Viet (2008) ( Viet Nam)
Source: Authors compilation
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Thank you
Asian Development Bank Institute
www.adbi.org
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