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This article shows how sample survey data from both the remitting and receiving ends can be used to derive estimates of total remittances by migrants from Tonga and Western Samoa, including those sent through unofficial channels. Such survey data can provide a wealth of information on the variety of forms and channels of remittances used by migrants, from which it is possible to assess the quantitative and qualitative significance of these hidden international resource flows. Unrecorded remittances are found to constitute a highly significant part of total remittances to these Pacific island countries. It is argued that current account estimates from official balance of payments data in these situations need to be treated with extreme caution, especially in the context of macroeconomic analysis and policy formulation.

AbstractWe investigate the effect of remittances on bank credit in developing countries. Understanding this link is important in view of the growing relevance of remittances as a source of external finance and of the beneficial impact that financial intermediation is likely to have on economic growth. Our contribution is twofold. First, we present a theoretical model of bank credit in a hypothetical remittances‐receiving country where: (1) the banking sector is imperfectly competitive; and (2) bank rates change infrequently because of the presence of adjustment costs. We show that in equilibrium, the relationship between remittances and bank‐credit is likely to be non‐linear. Second, we look at the evidence using a panel data set for a large group of developing and emerging economies over the period 1970–2009. We find that at initially low levels of remittances, an increase in remittances reduces the volume of credit extended by banks. However, at sufficiently high levels of remittances, the effect becomes positive. The turning point of the relationship occurs at a level of remittances of about 2.5% of GDP, which would imply that approximately 50% of our sample lies to each side of this threshold.

AbstractWe use original 2005 household survey data from Fiji and Tonga to estimate the impact of migration and remittances on income distribution and measures of poverty. Measures of inequality and poverty based on observed, with‐migration income and remittances are then compared with those based on two without‐migration and remittances scenarios; one in which remittances are treated simplistically as an exogenous addition to household income, and another in which counterfactual household incomes are estimated, taking account of what the migrant members would have earned had they not migrated. The estimated effects of remittances on poverty alleviation were found to be stronger when the more rigorous, counterfactual income estimates are used, but their effect on income inequality was found to be ambiguous. The extent to which migration and remittances alleviate poverty was also found to be more substantial in Tonga, the country with a much longer migration history and higher remittance dependence. Copyright © 2008 John Wiley & Sons, Ltd.

For more than a quarter of a century there has been substantial emigration from the smaller island states of the Pacific to metropolitan fringe states, mainly the United States, New Zealand and Australia. Migration reduced unemployment in the island states and remittances have contributed to raised living standards. There has been some shift of remittances from consumption to investment. Communal remittances are of greater significance than in other world regions. There is a high propensity to sustain remittance flows over long periods of time at some cost to the senders. The duration and magnitude of migration, the remittance flows and their considerable social and economic consequences in a range of contexts has demonstrated the need for much more attention to be given, in terms of both studies and policy formation, to the role of migration and remittances in economic and social development in the Pacific region.

This article examines the findings of an analysis of sample survey data on the uses and determinants of remittances among Tongan and Western Samoan households. These surveys were undertaken at both the receiving and remitting ends of the process, and bring forth important evidence that remittances are not used exclusively for consumption purposes and play an important role in contributing to both savings and investment in the migrant sending countries. It also shows that remittances appear not to be driven exclusively by altruistic sentiments and the need for family support, but also, among some migrant categories, by the motivation to invest. There appears to be substantial scope for policy intervention on the part of Pacific island governments to increase the flows of remittances into their economies.

AbstractUsing data from a customized household survey in Fiji, we assess the extent to which remittances are motivated by the migrants' commitment to provide social protection to their families back home. We test this hypothesis by estimating econometrically the responsiveness of migrants' remittances to the perceived financial need of recipients. We extend a mixed‐motives model of private transfers, incorporating household‐specific, subjectively assessed welfare in place of the more generally used poverty‐line measure of welfare. We find stronger evidence that remittances provide important social protection for the poorest when using our extended model. We also find a positive, but relatively much weaker, relationship for those above the poverty threshold, implying support for switching of motives once the household's welfare has reached a level that is deemed adequate. We consider the possibility that welfare improvements in migrant‐sending countries could increase or decrease remittance flows depending on pre‐transfer welfare levels and other intervening factors. In relation to policy, we caution against policy interventions that could undermine the functioning of the informal social protection role of migration and remittances. We also caution against unwarranted concern over the use of remittances for consumption spending and the associated, misplaced policy measures to address this.

Migrants are often subject to social pressures to remit beyond their own households, to share the benefits of migration with the wider community in their home country; these are 'community remittances'. We hypothesise that community sharing norm pressures are stronger in locations with more extensive home community networks. We also postulate that the responsiveness of remittances to sharing pressures is subject to diminishing returns, attributable to a donor fatigue effect. Using customised survey data from three Polynesian migrant groups in metropolitan and regional Australia, we estimate double-hurdle regression models of community remittances. To identify the effects of sharing norm pressures we exploit an exogenous (cyclone) shock to home country incomes affecting one sub-group. We find strong evidence in support of the postulated responsiveness of community remittances to location-related differences in sharing norm pressures, and the presence of a donor fatigue effect. The policy implications are discussed. Adapted from the source document.