Remittance receipts and allocation: a study of three African countries

Remittances may influence household expenditures, poverty rates, development and investments in the receiving country. Using World Bank survey data from Ethiopia, Uganda and Kenya, the influence of remitters’ and recipients’ characteristics on remittance amounts and allocation is examined. Effects of the remitter–receiver characteristics on remittance amounts are generally similar between countries. Such similarities imply a potential similar effect of policies in these countries. Age, household income, frequency of communication, family relations with remitter and country the recipient resided in influence remittance allocation. Recipients in Ethiopia and Uganda are more likely to allocate remittance towards savings than those in Kenya.     

Exploring Nonlinearities in Path Models

In causal analysis, path models are an appropriate tool for studying relationships between social phenomena. However, they assume linear linkages between variables, and hence they are not always suitable for describing the complexity and richness of relationships in social phenomena. The aim of this work is to propose an exploratory graphical method to evaluate if the phenomena under analysis are actually characterized by non-linear linkages. In particular, the method is well suited to discovering interactions between the observed variables in path models. The proposed approach, which does not depend on any hypothesis on the error distribution, is based on a series of plots that can be easily interpreted and drawn using standard statistical software. As an additional feature, the plots – which we call joint effect plots – support qualitative interpretation of the non-linear linkages after the path model has been specified. Finally, the proposed method is applied within a case study. Non-linearities are explored in a casual model aiming to find the determinants of remittances of a group of Tunisian migrants in Italy.     

The effect of remittances prior to an election

The objective of the article is to assess whether remittances have an influence on political manipulation, which may occur prior to an election, through an increase in the government consumption-to-GDP ratio. We combine data from the National Elections across Democracy and Autocracy data set compiled and discussed in Hyde and Marinov (2012) and the World Development Indicators data set. We focus on 70 developing countries over the period 1990–2010. It appears that the political budget cycle is reduced up to the point where it is fully cancelled out at a remittance threshold of 10.7% of GDP. Those findings are robust to different robustness checks.     

REMITTANCES AND FINANCIAL DEVELOPMENT: SUBSTITUTES OR COMPLEMENTS IN ECONOMIC GROWTH?

Recent studies indicate that the effect of migrants’ remittances on the economic growth of receiving countries depends negatively on the level of development of the domestic financial sector. In this paper, we introduce a new indicator of financial development to measure the efficiency of the domestic banking system, and find the existence of complementarity between remittances and bank efficiency in economic growth, such that remittances promote growth only in countries whose banks function well. This result is robust to controls for other traditional measures of financial depth and institutional quality indicators.     

ON THE PATH TO ECONOMIC GROWTH,DO REMITTANCES HELP? EVIDENCE FROM PANEL VARs

Despite the emergence of remittances studies, knowledge about their effect on economic development is still ambiguous. This paper investigates the impact of remittances at macroeconomic level in developing countries controlling for endogeneity problems with the use of panel vector autoregression (panel VAR). The findings suggest that remittances have a positive, albeit small, impact on economic growth even without considering the role of institutions. When institutions are included, the pattern of response remains unaltered. A distinction between low versus high remittances participation in economic activity evidences that, although the impact of remittances on growth is similar, appreciation of the exchange rate occurs in economies with high remittances participation. Finally, a distinction by geographical region reveals that Eastern European economies receive the greatest benefit from these flows, followed by the Americas and Asia; however, African economic growth does not appear to have a statistically significant impact.     

Migrant Organization and Hometown Impacts in Rural Mexico

The interaction between migration, development and rural democratization is not well understood. Exit is usually understood as an alternative to voice, but the Mexican experience with cross-border social and civic action led by hometown associations suggests that exit can also be followed by voice. This article explores migrant impacts on hometown civic life, focusing on voice and bargaining over community development investments of collective remittances that are matched by government social funds. The most significant democratizing impacts include expatriate pressures on local governments for accountability and greater voice for outlying villages in municipal decision-making.     

The effects of international remittances on expenditure patterns of the left‐behind households in Sub‐Saharan Africa

This article explores the effects of international remittances on the expenditure patterns of households in Sub‐Saharan Africa (SSA). This article focuses on five countries in SSA, which are some of the destinations that account for the highest receipt of international remittances. We analyze both aggregate and distributional effects of international remittances on expenditure patterns of households. To investigate the distributional effect of international remittances, we adopt the instrumental variable quantile (IV‐quantile) regression framework that allows us to simultaneously address the endogeneity of international remittances and possible heterogeneity in the impact of international remittances on households’ expenditure patterns. We instrument for international remittances by using the economic conditions in migrants’ countries as an instrument for international remittances. Our results show that the receipt of international remittances increases expenditures on food, durables, education, and health. Using the IV‐quantile regression, we find the effects of international remittances on household expenditure on food, durables, education, and health increase across the different expenditure quantiles.     

Corruption,remittances, and public goods: A unified framework

Remittances are an important source of income for the very countries afflicted by high levels of corruption. However, corruption undermines the development potential of remittances. With this in mind, we propose policy reforms that harness the potential of remittances while mitigating corruption. Unlike previous studies, we point to two channels: (1) the corrupt government's trade-off between its financial interests (corruption), the provision of a public good, and the gains from a higher inflow of remittances; and (2) the household's consumption of the public good relative to that of the privately obtained substitute of the public good.