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

Author

Listed:
  • Vargas-Silva, Carlos

    (International Migration Institute)

  • Jha, Shikha

    (Asian Development Bank)

  • Sugiyarto, Guntur

    (Asian Development Bank)

Abstract

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.

Suggested Citation

  • Vargas-Silva, Carlos & Jha, Shikha & Sugiyarto, Guntur, 2009. "Remittances in Asia: Implications for the Fight against Poverty and the Pursuit of Economic Growth," ADB Economics Working Paper Series 182, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0182
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    Cited by:

    1. Kassey P. Garba & Wasiu Adekunle & Oluwatosin Adeniyi, 2020. "Nexus between Foreign Remittances and Economic Growth in Nigeria: Role of the Financial Sector," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 7(1), pages 15-24.
    2. Tchantchane, A. & Rodrigues, G. & Fortes, P.C., 2013. "An Empirical Study on the importance of Remittance and Educational Expenditure on Growth: Case of the Philippines," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 13(1), pages 173-186.
    3. Frank Adusah-Poku, 2016. "Which Form of Foreign Capital Inflows Enhance Economic Growth? Empirical Evidence in Sub-Saharan Africa," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 6(10), pages 557-570, October.
    4. Inoue, Takeshi, 2018. "Financial development, remittances, and poverty reduction: Empirical evidence from a macroeconomic viewpoint," Journal of Economics and Business, Elsevier, vol. 96(C), pages 59-68.
    5. Soma Rani Sutradhar, 2020. "The impact of remittances on economic growth in Bangladesh, India, Pakistan and Sri Lanka," International Journal of Economic Policy Studies, Springer, vol. 14(1), pages 275-295, February.
    6. Munim K. Barai, 2012. "Development Dynamics of Remittances in Bangladesh," SAGE Open, , vol. 2(1), pages 21582440124, January.
    7. Bichaka Fayissa & Christian Nsiah, 2012. "Financial Development and Remittances in Africa and the Americas: A Panel Unit-Root Tests and Panel Cointegration Analysis," Working Papers 201201, Middle Tennessee State University, Department of Economics and Finance.
    8. Ziesemer, Thomas H.W., 2012. "Worker remittances, migration, accumulation and growth in poor developing countries: Survey and analysis of direct and indirect effects," Economic Modelling, Elsevier, vol. 29(2), pages 103-118.
    9. Dorsaf Sridi & Wafa Ghardallou, 2021. "Remittances and disaggregated country risk ratings in Tunisia: an ARDL approach," Middle East Development Journal, Taylor & Francis Journals, vol. 13(1), pages 191-211, January.
    10. Udaya Wagle, 2016. "The Role of Remittances in Determining Economic Security and Poverty in Myanmar," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 28(4), pages 536-554, September.
    11. Adnan KHURSHID & Yin KEDONG & Adrian Cantemir CALIN & Cristina Georgiana ZELDEA & Sun QIANG & Duan WENQI, 2020. "Is the Relationship between Remittances and Economic Growth Influenced by the Governance and Development of the Financial Sector? New Evidence from the Developing Countries," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 37-56, March.
    12. Nahed Zghidi & Imen Mohamed Sghaier & Zouheir Abida, 2018. "Remittances, Institutions, and Economic Growth in North African Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(3), pages 804-821, September.
    13. Yaw Nyarko & Kwabena Gyimah-Brempon, 2011. "Social Safety Nets: The Role of Education, Remittances and Migration," RSCAS Working Papers 2011/26, European University Institute.
    14. Emon Kalyan Chowdhury & Bablu Kumar Dhar & Md.Abu Issa Gazi, 2023. "Impact of Remittance on Economic Progress: Evidence from Low-Income Asian Frontier Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(1), pages 382-407, March.
    15. Bresciani, F. & Imai, K.S. & Malaeb, B., 2017. "IFAD RESEARCH SERIES 15 - Remittances, growth and poverty reduction in Asia," IFAD Research Series 280053, International Fund for Agricultural Development (IFAD).
    16. Christian Nsiah & Bichaka Fayissa, 2013. "Remittances and economic growth in Africa, Asia, and Latin American-Caribbean countries: a panel unit root and panel cointegration analysis," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 37(3), pages 424-441, July.
    17. Kostas Mavromaras & Alfiah Hasanah & Silvia Mendolia & Oleg Yerokhin, 2017. "Labour Migration, Food Expenditure, and Household Food Security in Eastern Indonesia," The Economic Record, The Economic Society of Australia, vol. 93, pages 122-143, June.
    18. Sonia Afrin Ale & Rasheda Akter & MD. Shafiqul Islam, 2018. "Remittance Inflow and GDP Growth: Evidence from Bangladesh, India and Pakistan," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(11), pages 1340-1353, November.
    19. Song, Yuegang & Paramati, Sudharshan Reddy & Ummalla, Mallesh & Zakari, Abdulrasheed & Kummitha, Harshavardhan Reddy, 2021. "The effect of remittances and FDI inflows on income distribution in developing economies," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 255-267.
    20. Ahmed, Vaqar & Sugiyarto, Guntur & Jha, Shikha, 2010. "Remittances and Household Welfare: A Case Study of Pakistan," ADB Economics Working Paper Series 194, Asian Development Bank.
    21. Abida Zouheir & Imen Mohamed Sghaier, 2014. "Remittances, Financial Development and Economic Growth: The Case of North African Countries," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 17(51), pages 137-170, March.
    22. Sk. Mahmudul Alam, Mahmud, 2012. "Microfinance institutions will be an important instrument to earn more remittance, send remittance and utilize remittance in Bangladesh," MPRA Paper 36459, University Library of Munich, Germany, revised 14 Feb 2012.
    23. Brindusa Mihaela Radu & Mariana Balan, 2022. "Impact Of The Covid 19 Pandemic On Remittances: Worldwide, Regional, National," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 4, pages 137-145, August.
    24. Genc, Ismail H., 2022. "Are Indian Subcontinent remittance markets connected to each other?," Journal of Asian Economics, Elsevier, vol. 80(C).

    More about this item

    Keywords

    Migration; Remittances; Poverty; Economic Growth; Impacts;
    All these keywords.

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