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International Remittances and Poverty Reduction: Evidence from Asian Developing Countries

Author

Listed:
  • Yoshino, Naoyuki

    (Asian Development Bank Institute)

  • Taghizadeh-Hesary, Farhad

    (Asian Development Bank Institute)

  • Otsuka, Miyu

    (Asian Development Bank Institute)

Abstract

International remittances represent the second most important source of external funding for developing countries after foreign direct investment (FDI). We examine the impact of international remittances on poverty reduction using panel data for 10 Asian developing countries. In terms of the dependent variables, we set three poverty indicators: poverty headcount ratio, poverty gap ratio, and poverty severity ratio. Results show that international remittances have a statistically significant impact on the poverty gap ratio and poverty severity ratio under the random effect model of ordinary least squares (OLS) estimates. A 1% increase in international remittances as a percentage of gross domestic product (GDP) can lead to a 22.6% decline in the poverty gap ratio and a 16.0% decline in the poverty severity ratio in the sample of 10 Asian developing countries from 1981 to 2014. In addition, results show that per capita GDP increase and trade openness can decrease poverty measures, and higher inflation rates may be one of the causes of the poverty.

Suggested Citation

  • Yoshino, Naoyuki & Taghizadeh-Hesary, Farhad & Otsuka, Miyu, 2017. "International Remittances and Poverty Reduction: Evidence from Asian Developing Countries," ADBI Working Papers 759, Asian Development Bank Institute.
    • Handle: RePEc:ris:adbiwp:0759
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    Cited by:

    1. Md. Saiful Islam & Ibrahim A. Alhamad, 2023. "Do personal remittance outflows impede economic growth in Saudi Arabia? The role of trade, labor force, human, and physical capital," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-9, December.
    2. Yoshino, Naoyuki & Taghizadeh-Hesary, Farhad & Otsuka, Miyu, 2020. "Determinants of international remittance inflow in Asia-Pacific middle-income countries," Economic Analysis and Policy, Elsevier, vol. 68(C), pages 29-43.
    3. Genc, Ismail H., 2022. "Are Indian Subcontinent remittance markets connected to each other?," Journal of Asian Economics, Elsevier, vol. 80(C).
    4. Sima Rani Dey & Faroque Ahmed & Mohammad Tareque & Md. Moniruzzaman, 2024. "Impact of Returnee Remittances on Migrant Households’ Well-Being in Bangladesh," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 36(6), pages 1545-1572, December.
    5. Kim, Jounghyeon, 2023. "Does population aging matter for remittances in developing countries?," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1038-1056.
    6. Saptono Prianto Budi & Mahmud Gustofan & Lei Li-Fen, 2022. "Do international remittances promote poverty alleviation? Evidence from low- and middle-income countries," IZA Journal of Development and Migration, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 13(1), pages 1-20, January.
    7. Tamanna Islam, 2021. "Workers¡¯ Remittances and Economic Growth: Evidence From Bangladesh," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(2), pages 233-241, April.
    8. Fagbemi, Fisayo & Olufolahan, Toyin, 2019. "Capital inflows, financial development and poverty reduction in Nigeria," MPRA Paper 112784, University Library of Munich, Germany, revised 04 Apr 2019.

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    More about this item

    Keywords

    remittances; poverty reduction; developing Asia;
    All these keywords.

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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