Do Remittances Reduce Poverty? Evidence from Asian Countries

Abstract

This research delves into the examination of the influence of remittances on poverty alleviation across ten Asian nations spanning the period from 2006 to 2019. The study employs a rigorous analytical framework involving panel data analysis and fixed effects regression models, a methodological approach hitherto unexplored in the context of this research domain. A central theme of this investigation underscores the pivotal importance of tailored policy interventions and support mechanisms aimed at harnessing remittances as a sustainable instrument for mitigating poverty in diverse Asian settings. While existing literature has established a positive correlation between remittances and poverty reduction in several countries worldwide, it is imperative to acknowledge the intricate and varying nature of this relationship across different countries and regions. This study concentrates on dissecting the linkage between remittances and poverty alleviation within the Asian context. Our findings reveal a noteworthy inverse association between the proportion of remittances to Gross Domestic Product (GDP) and the real GDP per capita with the poverty headcount ratio in these nations. These empirical insights affirm the potential of remittances to serve as a poverty alleviation tool in Asian countries. Remittances emerge as a substantial source of income for households and can be strategically channelled towards productive endeavours, such as investments in education or small-scale entrepreneurial ventures. These productive investments possess the capability to augment income levels and consequently contribute to long-term poverty reduction. Thus, advocating for the augmentation of remittance volumes and promoting their utilization in productive activities represent efficacious strategies for combatting poverty in the Asian context.