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An Empirical Investigation of the Impact of Foreign Remittances on Poverty in Developing Countries

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  • Mohammad Imran Hossain

    (Graduate School of Asia Pacific Studies, Ritsumeikan Asia Pacific University, Japan)

Abstract

Remittances sent to home countries by migrant workers became significant in amount. Such funds can have profound implications for economic development, human welfare and poverty reduction in a developing country context. This paper examines the impact of foreign remittances on poverty in selected developing countries. A set of time series data has been utilized to empirically check the relationship between remittances and poverty for a list of 44 developing countries worldwide. For the purpose of the study, the ‘Three Stage Least Squares’ (TSLS) regression technique has been applied. A separate analysis for a group of countries among the list which recorded a remittances to GDP ratio of 2% or more has been performed. The study finds that remittances have a significant negative impact on poverty in a developing country.

Suggested Citation

  • Mohammad Imran Hossain, 2015. "An Empirical Investigation of the Impact of Foreign Remittances on Poverty in Developing Countries," Economy, Asian Online Journal Publishing Group, vol. 2(2), pages 44-48.
  • Handle: RePEc:aoj:econom:2015:p:44-48
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    References listed on IDEAS

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    1. Ravallion, Martin, 1997. "Can high-inequality developing countries escape absolute poverty?," Economics Letters, Elsevier, vol. 56(1), pages 51-57, September.
    2. Adams, Richard Jr. & Page, John, 2005. "Do international migration and remittances reduce poverty in developing countries?," World Development, Elsevier, vol. 33(10), pages 1645-1669, October.
    3. Ralph Chami & Connel Fullenkamp & Samir Jahjah, 2005. "Are Immigrant Remittance Flows a Source of Capital for Development?," IMF Staff Papers, Palgrave Macmillan, vol. 52(1), pages 55-81, April.
    4. Miguel D. Ramirez & Hari Sharma, 2009. "Remittances and Growth in Latin America: A Panel Unit Root and Panel Cointegration Analysis," Estudios Economicos de Desarrollo Internacional, Euro-American Association of Economic Development, vol. 9(1).
    5. Taylor, J. Edward, 1992. "Remittances and inequality reconsidered: Direct, indirect, and intertemporal effects," Journal of Policy Modeling, Elsevier, vol. 14(2), pages 187-208, April.
    6. Gustafsson, Bjorn & Makonnen, Negatu, 1993. "Poverty and Remittances in Lesotho," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 2(1), pages 49-73, May.
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