CREB - Center for Research in Economics and Business

Financial Crisis and Migrant Remittances: Estimating the Effects on Growth and Poverty

Project members:
Azam Chaudhry, Lahore School of Economics
Naved Hamid, Lahore School of Economics
Salman Asim , World Bank
Anum Bukhari , Lahore School of Economics

Mahreen Mahmud, University of Oxford
Tareena Musaddiq, Georgia State University

With a grant from South Asia Network for Economic Institutes (SANEI), the team of researchers empirically investigated the effects of the global financial crisis on remittance growth and national income in Bangladesh, Sri Lanka and Pakistan. This project was completed in 2011.

The study evaluated the impact of the financial crisis on remittances received by the selected South Asian countries through a three step procedure. It found the GDPs of the advanced economies and the lagged GDP of the Middle Eastern countries to be important determinants of remittances to these countries. The predicted impact of the dip in the growth rate of GDPs of these countries in the wake of the financial crisis was a slowdown in growth rate of remittances to Pakistan, Bangladesh and Sri Lanka of the order of 3.75, 3.53 and 1.75 percentage points respectively. Further, employing a dynamic Keynesian model, the contemporaneous multiplier for impact of remittances on GDP is found to be greater than one for all three countries. This allows the researchers to predict a decrease in growth rate of GDP of 0.4 for Pakistan, 0.87 for Bangladesh and 0.3 for Sri Lanka in the 2010-12 period due to the estimated slowdown in remittance growth rates. As a supplemental exercise, the effect of remittances on household poverty at the micro-level is also estimated for Pakistan.

Findings published in:

Download Financial Crisis and Migrant Remittances: Effects on Growth and Poverty in Selected South Asian Countries

“Migrant Remittances to South Asia: Determinants and Effect on Growth”. by Mahmud, M., and Hamid, N. In M. K. Mujeri, and M. Wahiduddin (Eds.), Adjusting to Global Economic Volatility. The Case of South Asia. New Delhi: Academic Foundation 2014.