Efficient remittance services for development in the Pacific
AbstractCapital inflows to the Pacific islands from aid, foreign investment and remittances are an important source of development finance. Remittances are the fastest growing; they now total US$ 400 million per year and can be expected to grow even further as labour mobility is used to deal with seasonal labour shortages in Australia and New Zealand and limited job opportunities in the Pacific. The transaction costs of sending remittances to the Pacific islands are very high for the most widely used methods. This paper examines the New Zealand- Tonga remittance corridor, where typical transactions involve costs in the order of 15 to 20 per cent for bank drafts and transfers through money transfer companies such as Western Union. Cheaper transfer methods using automated teller machines (ATMs) are feasible and have transaction costs of less than 5 per cent but are not widely used. This spread of 10 percentage points between the most popular and the cheapest remittance methods means a potential loss for Tonga of the equivalent of 4 per cent of GDP. Extrapolating from this remittance corridor to the rest of the Pacific, avoidable transaction costs may total US$ 40 million per year. Hypotheses about the continued reliance on high transaction cost methods are examined and implications for development policy are discussed.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) in its journal Asia-Pacific Development Journal.
Volume (Year): 14 (2007)
Issue (Month): 2 (December)
Contact details of provider:
Postal: The United Nations Building, Rajadamnern Nok Avenue, Bangkok 10200
Phone: (66-2) 288-1234
Fax: (66-2) 288-1000
Web page: http://www.unescap.org/
More information through EDIRC
remittances; financial access; transactions costs;
Find related papers by JEL classification:
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David McKenzie & John Gibson & Steven Stillman, 2007.
"Moving to Opportunity, Leaving Behind What? Evaluating the Initial Effects of a Migration Policy on Incomes and Poverty in Source Areas,"
Working Papers in Economics
07/23, University of Waikato, Department of Economics.
- David McKenzie & John Gibson & Steven Stillman, 2007. "Moving to opportunity, leaving behind what? Evaluating the initial effects of a migration policy on incomes and poverty in source areas," New Zealand Economic Papers, Taylor & Francis Journals, vol. 41(2), pages 197-223.
- John Gibson & David McKenzie & Halahingano Rohorua, 2006. "How Cost Elastic are Remittances? Estimates from Tongan Migrants in New Zealand," Working Papers in Economics 06/02, University of Waikato, Department of Economics.
- John Gibson & David McKenzie, 2007. "Using the Global Positioning System (GPS) in Household Surveys For Better Economics and Better Policy," Working Papers in Economics 07/04, University of Waikato, Department of Economics.
- Demirgüç-Kunt, A. & Beck, T.H.L. & Honohan, P., 2008. "Finance for all?: Policies and pitfalls in expanding access," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3508393, Tilburg University.
- John Gibson & David McKenzie & Bilal Zia, 2012.
"The Impact of Financial Literacy Training for Migrants,"
CReAM Discussion Paper Series
1216, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
- Gibson, John & McKenzie, David & Zia, Bilal, 2012. "The impact of financial literacy training for migrants," Policy Research Working Paper Series 6073, The World Bank.
- Wasana Karunarathne & John Gibson, 2013. "Financial Literacy and Remittance Behavior of Skilled and Unskilled Immigrant Groups in Australia," Department of Economics - Working Papers Series 1170, The University of Melbourne.
- Edmundo Murrugarra & Jennica Larrison & Marcin Sasin, 2011. "Migration and Poverty : Toward Better Opportunities for the Poor," World Bank Publications, The World Bank, number 2535, March.
- Gibson, John & McKenzie, David, 2007. "Using the global positioning system in household surveys for better economics and better policy," Policy Research Working Paper Series 4195, The World Bank.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Macroeconomic Policy and Development Division, ESCAP).
If references are entirely missing, you can add them using this form.