Transcript International Flow of Financial Resources

MIBE
The economics of emerging economies
The role of Finance in economic
development and the emerging economies
Gianni Vaggi, April 2014
Finance 1-3
5-REMITTANCES-A
Estimates and projections for remittance
flows to developing countries, 2009-2016
Top 10 recipients of migrant remittances
Remittances
• ANTICICLICAL
(increase after “standard” financial crises,
natural disaster, conflicts – Mexico 1995,
Indonesia and Thailand 1998)
 Smooth consumption
 Contribute to stability when local currency
devaluates
Remittances are anticiclical
MACROECONOMIC EFFECTS
• Securitization of future remittances
Use them as collateral to raise financing
form international markets to finance
development projects
Bond issue
Who is sending money?
The role of DIASPORA(S)
• COLLECTIVE dimension …
…made up by INDIVIDUALS
affects policy development
Incentives for remittances
1.
2.
3.
4.
5.
6.
Holding dual /multiple citizenship
Return Initiatives by sending countries
Destination Countries’ support for diaspora
Incentives for return by host countries
Tax exemptions
Banks allowed to use $ for local
transactions
7. Residents allowed to have a current
account in $
8. Offer bank services to migrants
REMITTANCES & DEVELOPMENT
• POSITIVE effects to finance MACRO CREDIT
(investments in social sectors: education,
health)
• NEGATIVE effects because of brain drain


Role of Institutions
Strengthen bank system
Major destination countries for emigrants
from Africa, 2010
(share of african emigrants)
Top countries of origin of African
immigrants in the US, 2010
Uses of remittances
• Investment in pyhisical capital and
entrepreneurship
• Education
• Health
• Insurance against adverse shocks
• Information and communication
technology
• Financial access
Use of remittances by receipien housholds in selected african countries, by
source of remittances (percent of total remittances)