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Friday, 22 January 2010

The fog of diaspora remittances...

Evidence from a new paper on the impact of remittances in sub-Saharan Africa :

The findings on the impact of remittances on economic growth are less clear-cut. One resultof our analysis that is fairly robust across specifications is a negative coefficient ofremittances in growth regressions. This result would suggest that the adverse effects ofremittances on growth may dominate, at least in SSA countries. Remittance flows could verywell reduce the volatility of consumption or alleviate financial constraints. On average,however, the evidence would indicate that the combined effect of the resulting real appreciation of the exchange rate, the brain drain, or adverse incentives on labor forceparticipation offsets these positive contributions.
Of course what this suggests is that remittances have to be "managed" to get the best out of them. This appears to be the general truth with many other external drivers (FDI, aid, etc). These are better seen through the prism of the overall quest for development - the danger of counter-productive outcomes is forever lurking.


  1. truth. Not only should hey be cleverly managed, but also they should be regarded as a powerful mean to build up the foundations of SSA (and the continent to a larger extent) seed capital to mass enterpreneurship.

  2. Interesting view. wonder why SSA remittances don't have the same impact as those to South Asian countries?


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