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Thursday, 16 October 2008

Financial crisis and remittances...

This reuters article, rightly identifies reduction in remittances as one of the key outcomes of the global slowdown. The Tanzanian government certainly appears to agree. The impact on poverty of course is a little more complicated. It very much depends on the size of the flow and the extent to which these remittances go beyond consumption related expenditure and are being used for business or human capital investments (e.g. supporting children at school). Others go as far as to suggest that reduction in remittances may not necessarily be a bad thing, since remittances have a pervese incentive of encouraging African governments to behave irresponsibly - see for example the blog Are Remittances a Curse? .

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