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The poverty effect of remittance flows: evidence from Georgia

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  • Ainura Uzagalieva
  • Antonio Menezes

Abstract

The main purpose of this study is to analyse the poverty effects of emigration and inward remittance flows through direct and indirect channels within the context of a standard computable general equilibrium (CGE) model. For that purpose we use a novel approach in modeling a social accounting matrix (SAM)-based CGE model by combining an original data set containing rich, highly-disaggregated household budget suveys with detailed macro-level data for Georgia. A distinctive contribution of this study is the attention paid to regional differences in terms of market access and transaction costs, in addition to households' factor endowments and consumption patterns. The main questions of interest are whether and to what extent remittance flows contribute to the production and consumption pattern of the poor. Two aspects of poverty reduction are emphasised: (1) the impact of remittances on aggregate and sectoral economic growth and (2) the impact of remittances on poor households, their production and consumption patterns across regions. The study concludes that, while having a strong macroeconomic growth effect at the aggregate level, emigration and inward remittance flows do not affect all sectors and residents symmetrically. Moreover, they have a rather limited impact in terms of poverty and income inequality.

Suggested Citation

  • Ainura Uzagalieva & Antonio Menezes, 2009. "The poverty effect of remittance flows: evidence from Georgia," Post-Communist Economies, Taylor & Francis Journals, vol. 21(4), pages 453-474.
  • Handle: RePEc:taf:pocoec:v:21:y:2009:i:4:p:453-474
    DOI: 10.1080/14631370903339856
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    References listed on IDEAS

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    1. Haider A. Khan, 2007. "Social Accounting Matrices(SAMs) and CGE Modeling:Using Macroeconomic Computable General Equilibrium Models for Assessing Poverty Impact of Structural Adjustment Policies," CIRJE F-Series CIRJE-F-463, CIRJE, Faculty of Economics, University of Tokyo.
    2. I-Ling Shen & Frédéric Docquier & Hillel Rapoport, 2010. "Remittances and inequality: a dynamic migration model," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 8(2), pages 197-220, June.
    3. Mihaly Simai, 2006. "Poverty and Inequality in Eastern Europe and the CIS Transition Economies," Working Papers 17, United Nations, Department of Economics and Social Affairs.
    4. Xiao-guang Zhang, 2006. "Armington Elasticities and Terms of Trade Effects in Global CGE Models," Staff Working Papers 0601, Productivity Commission, Government of Australia.
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    Cited by:

    1. Azer Dilanchiev & Aligul Aghayev & Md. Hasanur Rahman & Jannatul Ferdaus & Araz Baghirli, 2021. "Dynamic Analysis for Measuring the Impact of Remittance Inflows on Inflation: Evidence From Georgia," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(1), pages 339-347, January.
    2. George Berulava, 2019. "Migration and labor supply in Georgia: an empirical study," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 9(3), pages 395-419, September.
    3. Maya Grigolia & Lasha Labadze & Pavol Minarik & Alena Zemplinerova & Marek Vokoun, 2015. "Transfer of Know-how for SMEs in Georgia, Moldova and Ukraine. White Paper: Georgia," CASE Network Reports 0123, CASE-Center for Social and Economic Research.

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