Impact of remittances on poverty in developing countries
REPORT prepared under the UNCTAD/United Kingdom Department for International Development/Government of India Project on “Strategies and preparedness for trade and globalization in India”.
Remittances cannot be considered as a substitute for foreign direct investment (FDI), official development assistance (ODA), debt relief or other public sources of finance development, writes UNCTAD in this new report.
There has been a 15-fold increase in remittances to developing countries since 1988 with remittances increasing from $20 billion to $328 billion in 2007. This makes it important to continue to analyse the potential of migrants' remittances to contribute to development. Though there is a growing literature on the impact of remittances on development, very few studies have empirically estimated the impact of remittances on development in general, and on poverty in particular, in the developing countries.
To fill this gap in the literature, this study undertakes impact analysis of remittances on poverty in developing countries at three levels:
-it estimates the impact of remittances on poverty in 77 developing countries, with separate analyses for 29 developing countries and 21 Asian developing counties, which have 5 per cent or more share of remittances in gross domestic product (GDP).
-it undertakes a case study of India and estimates the impact of remittances on poverty in India, which has been one of the top recipients of remittances in 2008.
-it undertakes a more micro-level analysis by estimating impact of remittances on poverty in Kerala, which is one of the top remittance receiving states in India.
