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The Developmental Effectiveness of Remittances: Case Study on Huedin Town, Romania

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  • Daniel Pop

Abstract

Relying on survey data from Huedin, a town in Romania, we seek to provide an empirical evidence for the hypothesis according to which remittances could have either a positive or negative developmental impact at community level. For this, we inquire about the perceptions of migratory processes with focus on the possible effects of remittances in the local economy. Our first finding is that residents share a common view on the reasons of migration, namely that it has been triggered by the large pay levels that exists between the level of local and the Western European labor markets and that migration opportunity was enhanced by the lifting of visa requirements for Schengen countries. We have also found that remittances constitute a significant source of liquidity inflow and that the ways in which repatriated earnings were spent have influenced the performance of the local economy. We conclude that a reinterpretation of migration is required in order to capture the investment and entrepreneurial aspects of the phenomenon. In the formal model proposed in Appendix 2, we make a first attempt to conceptualise migration as a sector of the local economy in which migrants are entrepreneurs, who invest in migration activities to produce the composite commodity remittance.

Suggested Citation

  • Daniel Pop, 2006. "The Developmental Effectiveness of Remittances: Case Study on Huedin Town, Romania," wiiw Balkan Observatory Working Papers 64, The Vienna Institute for International Economic Studies, wiiw.
  • Handle: RePEc:wii:bpaper:064
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    References listed on IDEAS

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    1. Osman Tuncay Aydas & Kivilcim Metin-Ozcan & Bilin Neyapti, 2005. "Determinants of Workers' Remittances : The Case of Turkey," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 41(3), pages 53-69, May.
    2. Cox, Donald & Eser, Zekeriya & Jimenez, Emmanuel, 1998. "Motives for private transfers over the life cycle: An analytical framework and evidence for Peru," Journal of Development Economics, Elsevier, vol. 55(1), pages 57-80, February.
    3. Solimano, Andrés, 2003. "Remittances by emigrants: issues and evidence," Macroeconomía del Desarrollo 26, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    4. Rapoport, Hillel & Docquier, Frederic, 2006. "The Economics of Migrants' Remittances," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
    5. Miguel León-Ledesma & Matloob Piracha, 2001. "International Migration and the Role of Remittances in Eastern Europe," Studies in Economics 0113, School of Economics, University of Kent.
    6. Sarah Bracking, 2003. "Sending money home: are remittances always beneficial to those who stay behind?," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(5), pages 633-644.
    7. Vasily Astrov & Vladimir Gligorov & Peter Havlik & Mario Holzner & Gabor Hunya & Zdenek Lukas & Anton Mihailov & Leon Podkaminer & Josef Pöschl & Sandor Richter & Waltraut Urban & Hermine Vidovic, 2005. "Back from the Peak, Growth in Transition Countries Returns to Standard Rate of Catching-up," wiiw Research Reports 320, The Vienna Institute for International Economic Studies, wiiw.
    8. Djajic, Slobodan, 1986. "International migration, remittances and welfare in a dependent economy," Journal of Development Economics, Elsevier, vol. 21(2), pages 229-234, May.
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    More about this item

    Keywords

    Remittances; migration; development; Romania;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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