RIEB, Kobe University

Remittances, Growth and Poverty: New Evidence from Asian Countries

The present study re-examines the effects of remittances on growth of GDP per capita using annual panel data for 24 Asia and Pacific countries. The results generally confirm that remittance flows have been beneficial to economic growth. However, our analysis also shows that the volatility of capital inflows such as remittances and FDI is harmful to economic growth. This means that, while remittances contribute to better economic performance, they are also a source of output shocks. Finally, remittances contribute to poverty reduction – especially through their direct effects. Migration and remittances are thus potentially a valuable complement to broad-based development efforts. Yet migration and remittances should not be seen as a substitute for aid, as private money cannot be expected to contribute towards public projects. Also, not all poor households receive remittances, and public funds are meant to alleviate poverty.