Financial Crisis and Migrant Remittances: Effects on Growth and Poverty in Selected South Asian Countries

Abstract

The study proposes to evaluate the impact of the current financial crisis on remittances received by three South Asian countries, namely Pakistan, Bangladesh and Sri Lanka. The objective is twofold: to forecast the impact of change in remittances on the growth of these countries (macro level analysis) and to foresee the translation of this effect on the poverty and inequality in these countries (micro level analysis). At the macro level a forecast of the impact of financial crisis on remittances will be used in a Keynesian framework to assess the impact of remittances on the growth of these countries while at the micro level the consequent impact on poverty and inequality will be looked at. On the micro side, approach used in previous literature is to study the impact through various poverty measures. For this analysis the study aims to examine the changes on the poverty of these countries by looking at the FGT measures namely headcount, poverty gap and squared poverty gap and the GINI coefficient for inequality.

Keywords: Migration, Remittances, South Asia, Growth of Developing Countries, Dynamic Model, Income Distribution, Inequality, Poverty

JEL Classification: F22, F24, O11, O12, D31