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

36 Pages Posted: 1 Jun 2010

See all articles by Carlos Vargas-Silva

Carlos Vargas-Silva

University of Oxford

Shikha Jha

Asian Development Bank

Guntur Sugiyarto

Asian Development Bank

Date Written: December 1, 2009

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.

Keywords: Remittances, Economic Growth, Poverty, Asia

Suggested Citation

Vargas-Silva, Carlos and Jha, Shikha and Sugiyarto, Guntur, Remittances in Asia: Implications for the Fight Against Poverty and the Pursuit of Economic Growth (December 1, 2009). Asian Development Bank Economics Working Paper Series No. 182. Available at SSRN: https://ssrn.com/abstract=1618025 or http://dx.doi.org/10.2139/ssrn.1618025

Carlos Vargas-Silva (Contact Author)

University of Oxford ( email )

58 Banbury Road
Oxford, Oxfordshire OX2 6QS
United Kingdom

HOME PAGE: http://www.carlosvargassilva.com

Shikha Jha

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Guntur Sugiyarto

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

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