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South Asian construction
workers return to a labor camp outside Dubai
Dubai, UAE, Wednesday, Oct. 31, 2007 (AP Photo/Kamran Jebreili)
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A growing number
of researchers who study non-DAC donors and South-South cooperation have turned their attention to sources of development
finance other than aid. In particular, the role that remittances play in the
economic growth and development process of low-income and middle-income countries
has emerged
as a topic of significant interest to scholars and policymakers. To see why, consider
India. Because of its large diaspora community, India received more remittances
than any other country in the world in 2010. While one might assume that OECD
countries would supply the bulk of these remittances, Gulf countries were in
fact responsible for 45% of India’s 2010 remittances. India received more in remittances from the
United Arab Emirates than from the United States. In fact, this pattern can be seen throughout much
of South Asia. The wealth transfers that
have resulted from these migration patterns have potentially far-reaching implications
for politics and economic development in South Asia.
The
Hudson Institute’s Index on Global Philanthropy and Remittances provides data
on the volume of remittance flows between Gulf countries and South Asia. Now posted on the AidData website, the dataset
contains estimates of bilateral remittances for the year 2010, as calculated by
Dilip Ratha and Sanket Mohapatra at the World Bank. Using these estimates, we decided to explore
the volume of remittance flows from the Gulf to South Asia and compare these
flows to traditional ODA flows.
For
the purposes of our analysis, we define “South Asia” as the five core South
Asian states: India, Pakistan, Bangladesh, Nepal, and Sri Lanka. We consider “the Gulf” to include the six
original states of the Gulf Cooperation Council: Qatar, Saudi Arabia, United
Arab Emirates, Oman, Kuwait, and Bahrain.
We first assess the relative economic significance of remittance flows. To gauge the scale of these flows, we compare 2010 remittance flows from the Gulf countries to South Asian countries (as a percentage of recipient GDP) with total 2010 multilateral, non-DAC, and DAC bilateral aid flows (as a percentage of recipient GDP). The results are provided below.
We find that estimated remittance flows from Gulf States alone range between 1 to 3 times the size of ODA flows in the five
countries surveyed. In all five countries, remittance flows from the Gulf
exceed one percent of GDP, indicating that remittances constitute a significant
overall force in each recipient’s economy.
The size of these flows is important for two key reasons. First, remittance flows will likely impact economic
growth and development patterns in fundamentally different ways than traditional aid. Second, it shows that political instability
in the Middle East, as witnessed during the Arab Spring of 2011, has enormous repercussions
for South Asia. If a sizable number of
migrants flee from instability, the
remittances lost will likely have a substantial economic impact on South Asia.
Finally, it is
important to note that the available remittance data are inexact estimations of
varying quality. Private remittance
flows often go unrecorded, and remittance flows are sometimes attributed to the
country where the financial intermediary is headquartered rather than the country
of origin. Personal transfers that don’t
travel through banks are inherently difficult to estimate. Given the volume of
these flows, identifying methods to obtain more accurate data on remittances is
a key challenge for researchers who study the distribution and effects of development
finance.
This post was
contributed by Ben Buch and Jaclyn Goldschmidt, both AidData Research
Assistants at the College of William and Mary.
2 comments:
Ben and Jackie,
Love this post. Way to go. Reminds me of a great paper by David Singer in the American Political Science Review from 2010 -- "Migrant Remittances and Exchange Rate Regimes in the Developing World." First time I read that I knew there was a lot more work to do in this area and that if we want to start thinking about the total resource envelope shaping economic and development outcomes...
Anyway, I don't know if this link will work, but I think you will like the paper...
http://journals.cambridge.org/download.php?file=%2FPSR%2FPSR104_02%2FS0003055410000110a.pdf&code=38f3ea5763b772294c8f885f98070afa
Migration is a major problem of south Asian countries for the reason of unemployment.So is UAE is best choice for those. We provide money transfer services in Australia.
Remittance service
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