lecture note 10

When countries have identical factor endowments but

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Unformatted text preview: gy production distortions that differ across countries strong increasing returns to scale allowing factors to move increases the volume of goods trade and leads countries to be relatively well endowed with factors used intensively in their export industries. the HO observation becomes a result of trade, not a cause. 02-ECA_Migration.qxd 11/10/06 5:28 AM 58 Page 58 Migration and Remittances: Eastern Europe and the Former Soviet Union FIGURE 2.1 Leading 20 Remittance-Receiving Countries in the World (percentage of GDP in 2004) Tonga Haiti Moldova Lesotho Lebanon Bosnia and Herzegovina Jamaica El Salvador Honduras Albania Mongolia Dominican Republic Nepal Tajikistan Cape Verde Yemen, Rep. West Bank and Gaza Guinea-Bissau Armenia Guatemala 0 5 10 15 20 25 30 35 40 45 50 percent Source: IMF Balance of Payment Statistics:, World Bank. Note: Received remittances = received compensation of employee + received worker’s remittances + received migrants’ transfer. Lighter bars in the graph are ECA countries. As before, the problems of data quality are pervasive because of the difficulties of measuring remittances sent outside of the formal financial sector are very difficult to quantity. Further complicating these data problems are that large year-on-year increases in remittances may reflect improvements in central banks’ remittance recording systems rather than changes in migrants’ behaviors. Data While remittances have increased dramatically in a number of countries, they have slowed for others. A review of remittance flows over the past nine years demonstrates this pattern (figure 2.3). Interestingly, while remittances from migrants who have lived out of their 02-ECA_Migration.qxd 11/10/06 5:28 AM Page 59 Migrants’ Remittances 59 FIGURE 2.2 Remittances as a Portion of GDP in Eastern Europe and the Former Soviet Union, 2004 Moldova Bosnia and Herzegovina Albania Tajikistan Armenia Kyrgyz Rep. Georgia Macedonia, FYR Hungary Croatia Azerbaijan Lithuania Estonia Latvia Slovak Rep. Poland Belarus Slovenia Ukraine Russian Fed. Bulgaria Kazakhstan Turkey Romania Czech Rep. 0 5 10 15 20 25 30 percent Source: IMF Balance of Payments Statistics. Note: Received remittances = received compensation of employee + received worker’s remittances + received migrants’ transfers. Albania and Slovak Republic are 2003 data, other countries are 2004 data. GDP is $ converted current price. home countries for more than one year represent the largest share of inflows, remittances from migrants who have lived abroad for less than a year represent an increasingly large share. Not all migrants, however, send remittances, particularly in those cases where the stay in destination countries is short. Surveys conducted for this report found that in Bulgaria, 80 percent did not; in Bosnia and Herzegovina, 37 percent; and in Romania, 62 percent. Generally remittance flows in ECA follow the same two-bloc pattern as migration (table 2.1). The EU and the middle-income Commonwealth of Independent States (CIS) countries are the main sourc...
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