Remittances - the unsung investment factor?
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Transcript of Remittances - the unsung investment factor?
Remittances: the unsung investment factor?
KEYNOTE ADDRESS BYMARK T. JONES
International Conference on Investment & Retail Management (ICIRM) - Istanbul – Turkey
23rd – 24th April 2012
Co-hosted by:
Academy of Business & Retail Management and the Journal of Business & Retail Management Research
Remittance n. 1 money sent, especially by post. 2 the act of sending money
Definition courtesy of the Oxford English Dictionary
Four key types of remittance
Family Remittances
Community Remittances
Migrant Worker Remittances
Social Remittances
The impact of remittances
Negative
Can creative a culture of dependency
Often results in “dollarisation” Often leads to increased inflation A way to launder money Negatively affects the balance of
payments
Positives
Facilitates trade Helps economic pump priming Provides essential seed capital Is a ‘lifeline’ for people and
countries outside or on the margins of the credit system
Remittance flows to developing countries are estimated to total $351 billion in 2011, an increase of 8% over the previous year, according to figures contained in the latest issue of the World Bank’s Migration and Development Brief.
· Global remittance flows, including those to high-income countries, were an estimated $483 billion in 2011.
· The top recipients of officially recorded remittances in 2011 were India ($58 billion), China ($57 billion), Mexico ($24 billion), and the Philippines ($23 billion). Other large recipients included Pakistan, Bangladesh, Nigeria, Vietnam, Egypt and Lebanon. However, as a share of GDP, remittances were larger in smaller and lower income countries; top recipients relative to GDP were Tajikistan, Lesotho, Nepal, Samoa and Tonga.
www.worldbank.org
http://blogs.worldbank.org/peoplemove/remittances-data-watchhttp://blogs.worldbank.org/peoplemove/remittances-data-watch
http://blogs.worldbank.org/peoplemove/remittances-data-watch
Courtesy of Dilip Ratha, lead economist at the World Bank
Haiti Aid Facts, David Roodman - Centre for Global Development (2010)
How remittances are being used
"In poorer families, remittances are often used for consumption. But after basic consumption needs are met, remittances are also used to finance education, health, housing and small business investment."
Dilip Ratha, economist at the World Bank.
“Lower income families spend a major part of their remittances on food, while the more well-off overseas worker households use it to finance the children’s education or put up a business.”
Kelly Bird, economist at the Southeast Asian department of the Asian Development Bank
Factors that drive remittances towards investment
“ Countries which recognize a dual-citizenship status receive more remittances than others. Moreover, the results also highlighted that remittances are strongly channelled into investment in these countries compared to the others.”
Does the dual-citizenship recognition determine the level and the utilization of international remittances? Cross-Country Evidence
Christian Ebeke (2011)
The jury is still out on the overall impact of remittances in remittance-receiving countries and on receiving households. Some of the evidence suggests that remittances have beneficial impacts on receiving countries and households. For instance, at the household level there is evidence that remittances increase human capital acquisition (Cox and Edwards 2003). Receiving remittances may relax the budget constraint of the receiving household potentially allowing the household to send children to school.
Remittances may also provide the capital necessary to start a small business (Woodruff and Zenteno 2007) or may simply cover household expenses during the period when the business is not generating profits. Receiving remittances may allow the household to enter more profitable but riskier businesses, given that remittances can be used as a source of support for the household. This role of remittances is especially important in those countries where credit markets are not well developed.
http://www.migrationobservatory.ox.ac.uk/policy-primers/migration-and-development
Useful resources about remittances
www.ifad.org/remittances/projects/
www.remittancesgateway.org
www.iadb.org/en/topics/remittances/remittances,1545.html
www.bbc.co.uk/news/business-30192220
Thank you for your attention
Feel free to contact me: [email protected] Twitter: marktjones500