Munich Personal RePEc Archive

International Remittances, Household Spending, and Investment: A Case Study Of Bangladesh

Kazi Abdul, Mannan and Gin Kok, Wei (2006): International Remittances, Household Spending, and Investment: A Case Study Of Bangladesh. Published in: Asian Migration and Diaspora Studies , Vol. 12, No. 2 (15 December 2006): pp. 36-54.

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Abstract

In many developing countries international remittances are an important catalyst in economic development and the reduction of poverty. The increasing importance of international remittances has stimulated research about their impact on economic development. Currently, the debate about the effect of remittances is unsettled. The paper focuses on the analysis of the effect of international remittances on households’ marginal spending on consumption and investment activities. The data on household expenditures come from a novel survey that carried out during the first half of 2005 in the People’s Republic of Bangladesh with the help of the professional surveying firm selected a random and representative sample of 1,800 households. The findings in this study complement those of the limited negative strand of the literature. Interestingly, the study finds that international remittances lead to a decrease in marginal spending on human capital categories. In addition, most consumption categories appear to be increasing as a result of the inflow of remittances. The only positive findings are observed in the cases of marginal spending on savings and business development. However, due to the small shares of savings and business development in the households’ overall budget, these benefits are overshadowed by the negative results in the case of consumption and human capital categories. . The current study shares the viewpoint and, as a result, emphasizes the importance of analyzing the effect of remittances on the development of rural and urban regions within a country. Remittances’ regional economic impact may be more comparable across countries.

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