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Impact of Remittances on Poverty in Developing Countries

  • Rashmi Banga
  • Pritish Kumar Sahu

Remittances are increasingly becoming an important source of external financing for the developing countries. For some of the developing countries, it forms almost 40-50% of their GDP. Though there is a growing literature on the impact of remittances on development, very few studies have empirically estimated the impact of remittances on poverty in the developing countries. This study undertakes impact analysis of remittances on poverty in developing countries at two levels. Firstly, it estimates the impact of remittances on poverty in 77 developing countries; Secondly, separate analyses are undertaken for 29 developing countries and 21 Asian developing counties, which have 5% or more share of remittances in GDP. The results of the study consistently show that remittances significantly reduce poverty in recipient countries but the results are more reliable for countries with remittances greater than 5% of GDP.

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Paper provided by eSocialSciences in its series Working Papers with number id:3100.

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Date of creation: Oct 2010
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Handle: RePEc:ess:wpaper:id:3100
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  1. 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.
  2. Dean Yang, 2004. "International Migration, Human Capital, and Entrepreneurship: Evidence from Philippine Migrants’ Exchange Rate Shocks," Working Papers 531, Research Seminar in International Economics, University of Michigan.
  3. Connel Fullenkamp & Thomas F. Cosimano & Michael T. Gapen & Ralph Chami & Peter Montiel & Adolfo Barajas, 2008. "Macroeconomic Consequences of Remittances," IMF Occasional Papers 259, International Monetary Fund.
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