2022-05-13-ADB-Bilateral_Remittance_Inflows_to_Asia_and_the_Pacific_Countercyclicality_and_Motivations_to_Remit_32页_910kb

Analysis Summary

Key Findings

1. Countercyclicality of Remittances

   • Bilateral remittance inflows in Asia and the Pacific are countercyclical relative to the business cycle, meaning remittances increase when the recipient country's economy weakens.
   • Central Asia and Southeast Asia show stronger countercyclicality than other subregions due to higher remittance dependence.

2. Determinants of Remittances

   • Migrant Stock: The primary determinant, with a near-elasticity of 1.
   • Remittance Motivations: Altruistic motives dominate, supported by disaster occurrence, currency depreciation (appreciation of recipient currency), and capital account openness.
   • Other Factors: Higher dependency ratios (especially elderly), lower transaction costs, oil price increases (in cases of oil-exporting host countries), and political instability amplify countercyclicality.

3. Policy Implications

   • Reduce remittance costs to align with Sustainable Development Goal 10c (target of ≤3% by 2030).
   • Strengthen digital infrastructure to improve efficiency and inclusion in remittance systems.
   • Prepare macroeconomic and social protection policies to mitigate shocks during economic downturns.

4. Methodological Notes

   • Results robust across different business cycle extraction methods (Christiano-Fitzgerald vs. HP filter).
   • Bilateral data show stronger countercyclicality compared to aggregated data, highlighting corridor-specific patterns.

Recommendations

• Policymakers should prioritize lowering remittance costs and enhancing digital adoption to leverage remittances' resilience.
• Data collection and regional cooperation should be improved to better understand remittance flows during crises.