The 'remittance trap': should we be concerned for small Pacific Island countries?

PLEASE NOTE: THE VENUE FOR THIS EVENT HAS CHANGED.
Crawford School of Public Policy | Arndt-Corden Department of Economics
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Event details

ACDE Seminar

Date & time

Tuesday 07 May 2019
2.00pm–3.30pm

Venue

Griffin Room, Level 1, JG Crawford Building 132, Lennox Crossing, ANU

Speaker

Ron Duncan, Emeritus Professor, Crawford School of Public Policy

Contacts

Ross McLeod, Seminar Convener, Arndt-Corden Department of Economics

Cross-country research has shown that while remittances reduce poverty in migrant labour source countries through increased consumption and spending on housing and education, there is little contribution to investment and no—even negative—contribution to economic growth. A recent IMF paper argues that the lack of contribution to growth reflects the Dutch Disease effects of remittance inflows, and that the poverty-reducing impacts reduce the pressure on governments to improve economic governance.

While some small-island Pacific states depend highly upon remittances, others have little to no such dependence. Is this ‘remittance trap’ effect present in the Pacific island countries and, if so, should we be encouraging Pacific island countries (PICs) to take advantage of overseas work—such as through the seasonal worker schemes in Australia and New Zealand? Relatedly, given Dutch Disease effects, should we be promoting remittances in PICs while attempting to promote exports through, for example, PACER Plus?

Updated:  25 June 2019/Responsible Officer:  Crawford Engagement/Page Contact:  CAP Web Team