The Impact of Remittances on Poverty Alleviation in Selected Emerging Markets

• Authors: Kunofiwa Tsaurai

Title variants

Wpływ przekazów pieniężnych na zmniejszanie ubóstwa na wybranych rynkach wschodzących

• Languages of publication: EN

Abstracts

EN

The study explored the impact of remittances on poverty in selected emerging markets. On the theoretical front, the optimistic view argued that remittances inflow into the labour exporting country reduces poverty whereas the pessimistic view proponents said that remittances dependence syndrome retards both economic growth and income per capita. Separately, using two measures of poverty [the poverty headcount ratio at US $1.90 and US $3.10 a day (% of population)] as dependent variables, the fixed effects approach produced results which supported the remittances led poverty reduction (optimistic) hypothesis whereas the pooled ordinary least squares (OLS) framework found that remittances inflow into the selected emerging markets led to an increase in poverty levels. The implication of the findings is that emerging markets should put in place policies that attract migrant remittances in order to reduce poverty levels. They should avoid over‑reliance on remittances as that might retard economic growth and income per capita.

PL

W artykule przedstawiono wyniki analizy wpływu przekazów pieniężnych na poziom ubóstwa na wybranych rynkach wschodzących. W rozważaniach teoretycznych zwolennicy optymistycznego podejścia uważają, że napływ środków pieniężnych do kraju eksportującego pracę zmniejsza ubóstwo, podczas gdy zwolennicy podejścia pesymistycznego twierdzą, że syndrom uzależnienia od przekazów pieniężnych ogranicza zarówno wzrost gospodarczy, jak i dochód per capita. Przy zastosowaniu dwóch miar ubóstwa [wskaźnik ubóstwa na poziomie 1,90 USD i 3,10 USD dziennie (% populacji)] jako zmiennych zależnych, podejście oparte na stałych efektach dało wyniki potwierdzające tezę, iż przekazy pieniężne prowadzą do ograniczenia ubóstwa (potwierdzenie hipotezy optymistycznej), podczas gdy przy użyciu metody pooled ordinary least squares (OLS) wykazano, że napływ środków w postaci przekazów pieniężnych na wybrane rynki wschodzące doprowadził do wzrostu poziomu ubóstwa. Z powyższych ustaleń wnika wniosek, że rynki wschodzące powinny wprowadzić politykę przyciągania przekazów migracyjnych w celu zmniejszenia poziomu ubóstwa. Powinny unikać natomiast nadmiernego polegania na przekazach pieniężnych, ponieważ może to opóźnić wzrost gospodarczy i ograniczyć dochód per capita.

Keywords

EN

remittances; poverty; emerging markets; panel data analysis

PL

przekazy pieniężne; ubóstwo; rynki wschodzące; analiza danych panelowych; przekazy pieniężne; ubóstwo; rynki wschodzące; analiza danych panelowych

• Publisher: Uniwersytet Łódzki. Wydawnictwo Uniwersytetu Łódzkiego
• Journal: Comparative Economic Research. Central and Eastern Europe
• Year: 2018
• Volume: 21
• Issue: 2
• Pages: 51-68

Dates

published

2018-10-02

Contributors

author

Kunofiwa Tsaurai

• Associate Professor at the University of South Africa, Department of Finance, Risk Management and Banking, Pretoria, South Africa

References

• Acharya, C. P. and Leon‑Gonzalez, R. (2012), The impact of remittance on poverty and inequality: A micro‑simulation study for Nepal, ‘National Graduate Institute for Policy Studies Discussion Paper’, 11–26.
• Adams, R. H. (2004), Remittances and poverty in Gautemala, ‘World Bank Policy Research Working Paper’, No. 3418.
• Adams, R. H. and Page, J. (2005), Do international migration and remittances reduce poverty in developing countries?, ‘World Development’, 33(10), 1645–1669.
• Adams, R. H., Cuecuecha, A. and Page, J. (2008) The impact of remittances on poverty and inequality in Ghana. The World Bank Development Prospects Group, ‘Development Economics Departmentand African Region Policy Research Working Paper’, 4732.
• Adams, R. H. (2011), Evaluating the economic impact of international remittances on developing countries using household surveys: A literature review, ‘The Journal of Developing Studies’, 47(6), 809–828.
• Adams, R. H. and Cuecuecha, A. (2013), The impact of remittances on investment and poverty in Ghana, ‘World Development’, 50 (October), 24–40.
• Anyanwu, J. C. and Erhijakpor, A. E.O. (2010), Do international remittances affect poverty in Africa?, ‘African Development Review’, 22(1), 51–91.
• Azam, M. Haseeb, M. Samsudin, S. (2016), The impact of foreign remittances on poverty alleviation: Global evidence, ‘Interdisciplinary Approach to Economics and Sociology’, 9(1), 264–21.
• Azfal, M., Malik, M. E., Begum, I., Sarwar, K. and Fatima, H. (2010), Relationship among education, poverty and economic growth in Pakistan: An Econometric analysis, ‘Journal of Elementary Education’, 22(1), 23–45.
• Azher, B. A. (1995), Rural savings: Their magnitude, determinants and mobilization, ‘Pakistan Development Review’, 34(4), 779–786.
• Babatunde, M. A. and Adefabi, R. A. (2005), A long run relationship between education and economic growth in Nigeria: Evidence from the Johansen’s co‑integration approach. Paper presented at the Regional Conference in West Africa: Constraints and Opportunities, Senegal, 1–2 November 2005. Cornell University.
• Bertoli, S. and Marchetta, F. (2014), Migration, remittances and poverty in Ecuador, ‘The Journal of Development Studies’, 50(8), 1067–1089.
• Betti, G. and Lundgren, L. (2012), The impact of remittances and equivalence scales on poverty in Tajikistan, ‘Central Asian Survey’, 31(4), 395–408.
• Beyene, B. M. (2014), The effects of international remittances on poverty and inequality in Ethiopia, ‘The Journal of Development Studies’, 50(10), 1380–1396.
• Calderon, C., Fajnzylber, P. and Lopez, H. (2007), Remittances and growth: The role of complementary policies. Lessons from Latin America, Washington, DC: The World Bank, 33–68.
• Cattaneo, C. (2005), International migration and poverty: A cross country analysis, Centro Studi Luca d’Agliano, Torino. www.dagliano.unimi.it/media/Cattaneo_Cristina.
• Chaudhry, I. S. and Rahman, S. (2009), The impact of gender inequality in education on rural poverty in Pakistan: An empirical analysis, ‘European Journal of Economics, Finance and Administrative Sciences’, 15, 174–188.
• Craigwell, R., Jackman, M. and Moore, W. (2010), Economic volatility and remittances, ‘International Journal of Development Issues’, 9(1), 25–42.
• Djajic, S. (1986), International migration, remittances and welfare in a dependent economy, ‘Journal of Development Economics’, 21(2), 229–234.
• Du, Y., Park, A. and Wang, S. (2005), Migration and rural poverty in China, ‘Journal of Comparative Economics’, 33(4), 688–709.
• Gaaliche, M. and Zayati, M. (2014), The causal relationship between remittances and poverty reduction in developing country: Using a non‑stationary dynamic panel data, ‘Atlantic Review of Economics’, 1(14), 1–12.
• Gupta, S., Pattillo, C. and Wagh, S. (2009), Impact of remittances on poverty and financial development in Sub‑Saharan Africa, ‘World Development’, 37(1), 104–115.
• Hatemi‑J,A. and Uddin, G. S. (2014), On the causal nexus of remittances and poverty reduction in Bangladesh, ‘Applied Economics’, 46(4), 374–382.
• Hobbs, A. W. and Jameson, K. P. (2012), Measuring the effect of bi‑directional migration remittances on poverty and inequality in Nicaragua, ‘Applied Economics’, 44(19), 2451–2460.
• Im, K. S., Pesaran, M. H. and Shin, Y. (2003), Testing unit roots in heterogeneous panels, ‘Journal of Econometrics’, 115(1), 53–74.
• Jahan, S. and McCleery, R. (2005), Making infrastructure work for the poor: Synthesis report of four country studies – Bangladesh, Senegal, Thailand and Zambia. New York: UNDP.
• Kuznets, S. (1955), Economic growth and income inequality, ‘American Economic Review’, (March), 1–28.
• Levin, A., Lin, C. F. and Chu, C. S.J. (2002), Unit root tests in panel data: Asymptotic and finite‑sample properties, ‘Journal of Econometrics’, 108(1), 1–24.
• McKay, A. and Deshingkar, P. (2014). Internal remittances and poverty: Further evidence from Africa and Asia, Migrating out of poverty Research Programme Consortium Working Paper 12.
• Migrant and Remittances (2016). Produced by World Bank Group’s Global Knowledge Partnership on Migration and Development. Third Edition.
• Odozi, J. C., Awoyemi, T. T. and Omonona, B. T. (2010), Household poverty and inequality: The implication of migrants’ remittances in Nigeria, ‘Journal of Economic Policy Reform’, 13(2), 191–199.
• Okuneye, P. A. (2001), Rural poverty assessment and control in Africa. An invited specialisation course paper presented at the United Nations IDEP, Dakar Senegal, June 19–22.
• Portes, L. S.V. (2009), Remittances, poverty and inequality, ‘Journal of Economic Development’, 34(1), 127–140.
• Pradhan, B. K. and Mahesh, M. (2014), Impact of trade openness on poverty: A panel data analysis of a set of developing countries, ‘Economic Bulletin’, 34(4), 2208–2219.
• Qayyum, A. Javid, M. and Arif, U. (2008). Impact of remittances on economic growth and poverty: Evidence from Pakistan, ‘Munich Personal RePEc Archive Paper’, No. 222941.
• Ratha, D. (2003). Workers’ remittances: An important and stable source of external development finance. In Global Development Finance 2003, Striving for development and finance. The World Bank, Washington, DC.
• Serino, M. N. and Kim, D. (2011), How do international remittances affect poverty in developing countries?, ‘Journal of Economic Development’, 36(4), 17–40.
• Shahidur, S.T (2012), The effect of inflation on poverty in developing countries: A panel data analysis, Master of Arts Dissertation with Texas Tech University. Unpublished, 1–56.
• Slddiqui, R. and Kemal, A. R. (2006), Remittances, trade liberalisation and poverty in Pakistan: The role of excluded variables in poverty change analysis, ‘The Pakistan Development Review’, 45(3), 383–415.
• United Nations (2010). Rethinking poverty, Report on the World Social Situation, United Nations, New York.
• Viet, C. N. (2008), Do foreign remittances matter to poverty and inequality? Evidence from Vietnam, ‘Economic Bulletin’, 15(1), 1–11.
• Waheed, O. O., Timothy, A. T., Adebayo, S. M. and Ayodele, O. (2013), Effects of remittances on poverty among rural households in Nigeria, ‘European Journal of Sustainable Development’, 2(4),263–284.
• Wouterse, F. (2010), Remittances, poverty, inequality and welfare: Evidence from the Central Plateau of Burkina Faso, ‘The Journal of Development Studies’, 46(4), 771–789.

Identifiers

DOI

10.2478/cer-2018-0011