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2013 | OriginalPaper | Buchkapitel

9. The Role of Cash Transfers from Migrants in Promoting the Financing of Economic Development in WAEMU Countries

verfasst von : Ameth Saloum Ndiaye

Erschienen in: Wealth through Integration

Verlag: Springer New York

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Abstract

This study demonstrates that cash transfers from migrants promote economic growth and that these resources contribute to increasing domestic investment. The fundamental stake of these cash transfers is that these resources are perceived as a new source for financing development. By focussing on the WAEMU countries for the period 1974–2006, our results show that productive investment is a major channel through which cash transfers influence growth. An econometric analysis also shows that cash transfers act de facto as a substitute for financial services in promoting productive investment and, as a result, growth in the zone. This result demonstrates, consequently, that the influence of cash transfers on investments occurs in a shallow financial system marked by limitations in liquidity, notably where there are few deposits and limited access to credit. The main implication is that it is essential to channel cash transfers more towards productive investments, first by boosting the number of migrants using banks, thus enabling the financial system to offer savings products and entrepreneurial loans, and secondly by setting up financial and non-financial support structures. In light of this, the study recommends the creation of a regional diaspora investment support fund that could be responsible for identifying promising migrant projects and could provide financial and technical support in order to improve their entrepreneurial capacity and ability to manage their productive activities.

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Vorheriges Kapitel Free Movement of Goods in WAEMU and the European Union: Community Law a Comparative Study from the Perspective of Trade

Nächstes Kapitel Efficiency of Credit That Targets the Poor: Measures and Application of Agricultural Credit in Burkina Faso

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The Dutch disease is a concept that designates the difficulties that the Dutch encountered following the discovery and exploitation of vast reserves of domestic natural gas. The literature divides the effects of the Dutch disease into the “effect of resource movements”, “effect of expenditure” and “effect of exchange rate” (Corden 1984; van Wijnbergen 1984; Neary et van Wijnbergen 2000; Carneiro 2007). The effect of resource movements is observed when the lucrative sector of natural resources attracts resources (talent, capital, public expenditure, etc.) coming from other sectors, contributing in this way to decreasing their growth. The effect of expenditure is present if the income from the natural resources creates increasing demand (and therefore inflation) in other sectors of the economy. The effect of the exchange rate that has been observed with a large internal flow of foreign currency coming from petrol and natural gas exports causes an appreciation of real exchange rate.

ICOR (incremental capital-output ratio) indicates the production gains generated per unit of capital. It is equal to the relationship between the variation in capital (investment) and the variation in production (GDP) (Beja et al. 2004).

ILCR (incremental labour-to-capital ratio) refers to the number of additional jobs created per unit of capital. It is equal to the relationship between the variation in employment and the variation in capital (investment) (Beja et al. 2004).

Because the calculation of per capita GDP does not take into account per capita cash transfers, it is clear that one person who also benefits from cash transfers will have an overall income equal to the sum of per capita GDP and the per capita cash transfer.

In addition to the interaction variable (TFP*DEFI), we separately considered cash transfers and financial development as independent variable in Eq. 9.3 to ensure that the interaction term was not a proxy variable for either cash transfers or financial development (Giuliano and Ruiz-Arranz 2005).

This is the Hispanic approach to cash transfers.

According to the approach to cash transfers in the English-speaking world, one can stimulate competition on the cash transfer market with looser regulations.

Nevertheless, the study by the African Development Bank (2008) found that the transaction costs have a secondary influence on the choice of how the resources are sent by migrants; this choice is primarily determined by the beneficiaries, who focus on the criteria of speed and fund accessibility.

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Titel: The Role of Cash Transfers from Migrants in Promoting the Financing of Economic Development in WAEMU Countries
verfasst von: Ameth Saloum Ndiaye
Verlag: Springer New York
Buch: Wealth through Integration
Print ISBN: 978-1-4614-4414-5

Electronic ISBN: 978-1-4614-4415-2

Copyright-Jahr: 2013
DOI: https://doi.org/10.1007/978-1-4614-4415-2_9