Theories Of Remittance

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This section will provide the theoretical framework to examine remittance effects. First, conceptual definition of remittance, second section will examine theories of remittance; third section will discuss the determinants of remittances, both at a microeconomic and macroeconomic level and in section four remittances and economic growth: empirical evidence for economic growth will be discussed.
2.1. Conceptual definition
Remittance has now become a commonly used term, however rarely defined; its concept has been linked with the concept of migration. When we see the definition it’s linked to its motives, effects, uses, kind of transfer and the channel of funds transfer. According to Ratha (2003) remittance are defined as migrants’ capital transfers, which are assets that a migrant brings into or takes out of the country. Remittances are also stated as a …show more content…

Macroeconomic determinant of Remittance
The other side of factors that determine the motives to remit is the macroeconomic determinants of remittance. Most empirical macroeconomic papers focus on the number of migrant workers, wage rates, the economic situation in the host and home country, inflation, consumption, exchange rate movements, the relative interest rate between the sending and receiving country, and government policies and political stability in the receiving country as determinants of remittance flows (El-Sakka and McNabb 1999, Buch & Kuckulenz 2004, Mouhoud et al. 2008, Tansel and Yasar 2010). ……….

Migrants would decide how much to send home depending on both their own income and the income of their family at home. Therefore the volume of remittances would depend on wages in the host economy, income in the home economy, and the total number of migrants (Singh et al., 2009). Freund and Spatafora (2005) also state that the stock of migrant workers in a host country is seen to be an obvious determinant of remittances: the greater the volume of workers, the greater the volume of

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