increasing development impacts of remittances

8/9/2019 Increasing Development Impacts of Remittances

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Increasing Development Impacts ofRemittances

Soonhwa Yi The World Bank


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Outline

Stylized facts

Development impacts

Policies to increase the bene ts

World Bank’s Global Knowled e Partnership on

!i ration and Development "K#$!%D&

'


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Remittances higher than ODA

(

Stable rowth b)t at a slower pace * e+pectedto rise to ,-./ billion in '01.

So)rce2 World Bank3 '01.4

0

100

'00

(00

-00

.00

500

600

700 FDI

ODA

Private debt & portfolioequity

Remittances

Resource inflows todeveloping countries(US$ billion)

FDI excl.China


4/32


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ADB countries – Top remittance

.

6(

5-

'7'.

'' '016 1.

11 10

";S, billion3 '01-e&



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Remittances: signicant also as a share ofGDP

5

-'

(' '/'. '-

'1 '1 '0 '0 '0

"Percent ofGDP3'01(&



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Remittances: signicant also as a share ofGDP (selected ADB countries)

6

-'

(''/

'-

'1 '0

1' 1' 11 10 10 /

(Percent of GDP, 201 )



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Remittances: signicant as a share offoreign reserves

7

.-'

''01/1

1--11/ 107 10- 10' 10' //

"Percent of 9eserves3 '01(&



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Remittances: signicant as a share offoreign reserves ( selected ADB countries)

/

.-'

1/1

10' /6 /' 75 7( 66 6( 5/-' ('

"Percent of forei n reserves3 '01(&



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Remittances: Resilient during sudden stops

10 So)rce2 World Bank3 G


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Remittances: More resilient in countries with moredispersed migrants during sudden stops

11 So)rce2 World Bank3 G


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Outline

Stylized facts

Development impacts




1'


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Cross-country an alysis: Lack of relationship between real GDPper capita growth and real remittance per capita growth

1( So)rce2 =lemens and !cKenzie3 '01-4


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Why?

1-

Depends on capital8constraints on investment "Gi)liano and9)iz8%rranz3 '00/& and on political instit)tions "Sin h et al3'011& $>settin e>ects on labor s)pply2

?ower labor force participation of remittance receivinho)seholds@ b)t!ore employment enerations and reater labor s)pply thro) hremittance8ind)ced investments "Posso3 '01'&

Weaker competitivenessD)tch disease e>ects "e4 43 in ?atin %merica by %costa el al3'00/&

$win to chan es in remittance meas)rements@ little powerto detect the e>ects on rowth thro) h cross8co)ntryre ressions "=lemens and !cKenzie3 '01-&4


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In the Philippines, the probability to join the laborforce of migrant households decreases as t heremittance amount increases.

1.

"Percent3 PAP&

So)rce2 van der Weide and i3 '01(4


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But, in East Asia Pacic as a whole, a positive relationship between remittances and growth in

15 So)rce2 World Bank3 '01-4


17/32


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Support current account thus improvingmacroeconomic st ability –e.g., the Philippines

17

'005 '006 '007 '00/ '010 '011 '01' '01(8(0000

8'0000

810000

0

10000

'0000

(0000";S, billion&

Goods Services Personal 9emittances

So)rce2 BSP3 the Philippines3 '01.4


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Positive impact on poverty reduction

1/

=o)ntry ects of remittances So)rce

Cndonesia Poverty headco)nt decreased by '647 percent4%dams and =)ec)echa"'011&

Philippines

% 10 percenta e point increase in remittancesis associated with a '47 percenta e pointdecrease in the poverty headco)nt in mi rantho)seholds an and !artinez "'005&

iEiPoverty headco)nt decreased by 6 percent "or'46 percenta e points& World Bank "'005&

Fon aPoverty headco)nt decreased by -( percent"or '-46 percenta e points& World Bank "'005&

Ghanaor ho)seholds receivin remittances3 the level

of poverty falls by 7741 percent4%dams3 =)ec)echa andPa e "'007&

?atin %mericaand the=aribbean

% 1 percenta e point incrase in the ratio ofremittances to GDP red)ces povertyheadco)nt by abo)t 04- percent

%costa3 aEnzylber and?opez "'007&

=ross8co)ntry

Ao)sehold s)rveys in 61 developin co)ntriesshow that a 10 percent increase in per capitaremittances in a co)ntry is associated with a(4. percent decline in the ;S,1 a day povertyrate %dams and Pa e "'00.&

So)rce2 World Bank3 '01-4


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Increasingly more households beneting fromremittances – the Philippines

So)rce2 WB sta> comp)tation based on the Philippines’ amily Cncome and


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While declining, around 8 percent, above the global target

'(

=)ttin prices by at least . percenta e points can save )p to

,15 billion a year4So)rce2 World Bank sta> calc)lations3 )sin 9emittance Prices Worldwide data4


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Sending $200 from Japan costs about $28, while $4 frm Russia

'-

0

'

-

5

7

10

1'

1-

15

17

'0!ver"ge costs to send $200 (percent, 201#)

Glob"l "ver"ge in 201#

Global target - !

So)rce2 World Bank 9emittance Prices Worldwide4


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Sending $200 to Africa and the Pacic costsmore than 10 percent.

'.

1'11

/ 76

5 5 5 5 .-

'

%vera e cost to send ,'00 "percent3 '01-&

So)rce2 World Bank 9emittance Prices Worldwide4


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MTOs offer a cheaper option; so does a cashto account transfer.

'5 So)rce2 World Bank sta> estimations3 )sin Bank 9emittance Prices Worldwide data3 '0112I18'01-2I-4

#ote2 9ob)st re ressions with +ed year e>ects4 JJJ p 04013 JJ p 040.3 J p 0413 Standard errors inparentheses4

"i& "ii& "iii& "iv& "v&M mar in 141/1JJJ 14117JJJ 14115JJJ 141(7JJJ 1411'JJJ

"0400/& "0400/& "0400/& "0400/& "04007&

rom Napan .40.7JJJ .4'7.JJJ -46-7JJJ -4/..JJJ

"04107& "04106& "0410.& "0410(&

rom 9)ssia 8(405.JJJ 8'46--JJJ 8'401(JJJ 8'4'01JJJ

"04106& "04105& "0410.& "0410(&

Fo %frica '41/1JJJ '4-'6JJJ '4(60JJJ

"040.5& "040..& "040.-&

Fhro) h Bank 147'.JJJ 14(66JJJ

"0410.& "0410-&

Fhro) h !F$ 814'-(JJJ 804606JJJ

"04101& "040//&

%cco)nt to acco)nt 040.(-

"04060&

$nline (4-5(JJJ


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Outline

Stylized facts

Development impacts




'6


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Countries of origin

'7

!i ration part of development strate ies plansDiversi cation in occ)pation and destinationSkill developmentCnd)stry development

Promote forei n direct investment and diasporainvestment to )tilize skills of ret)rneesDiversify trade in services

=ross8border trade3 e4 4 b)siness process o)tso)rcin

Brin forei n c)stomers home3 e4 43 medical to)rism3ed)cation services4

=ond)cive b)siness environment is key4


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Countries of Destination

'/

!i ration * inte ral part of national economicdevelopment and development cooperation strate ies49ed)ce barriers to mi ration * especially low8skilled labormi ration4!i rant inte ration4

irms need to move beyond short8term ains4=reate a career development path4Cncl)de environmental and social iss)es in b)siness models4

9emittances thro) h formal channels4

Fo achieve desirable o)tcomes3 close cooperation to etherwith co)ntries of ori in4


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+++.,nomad.or"

http://www.knomad.org/http://www.knomad.org/


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FhematicWorkinGro)ps

Data

-i"h,illedlabor

mi"ration

/o+er,illedlabor

mi"ration

Inte"rationi ue inho t

communitie

Policyand

in titutional

coherence

0i"rantri"htand

ociala pect

Demo"raphy and

mi"ration

Remittance

0obili1in"other

dia porare ource


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CnO)iries atsyi worldbank4or

('

increasing development impacts of remittances

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