This document discusses the role of remittances in financing and implementing the UN Sustainable Development Goals (SDGs). It finds that remittances can significantly impact SDGs through two main channels: by reducing poverty and increasing social spending at the household level, and by spurring investment, savings, and economic growth at the macro level. Empirical evidence from various countries shows that higher remittances lead to lower poverty, greater education and healthcare expenditures, more entrepreneurship and business investment. The document advocates leveraging remittances for SDGs through stimulating formal transfer channels, lowering costs, promoting financial products for migrants, and incentivizing investment of remittances in priority sectors. It also stresses improving social protections and rights of

1. The Role of Remittances in
Implementing the SDGs
Selim Raihan
Professor of Economics, Dhaka University, Bangladesh
Executive Director, SANEM
selim.raihan@gmail.com
Presented at the 2017 REGIONAL KNOWLEDGE EXCHANGE
Supporting Policy Coherence for Accelerating Progress Towards the 2030 Agenda.
Makati Diamond Residences, Makati City, Philippines
2-4 October 2017

2. Outline
• Importance of remittance in the Asia-Pacific countries
• Financing need of SDGs
• Remittance and SDGs: Channels of impact
• Remittances and SDGs: Empirical evidence
• Leveraging remittance for implementing SDGs
• Questions for discussion
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3. Remittances in Asia Pacific countries
(million US$ and average for 2011-2016)
Data source: World Bank, WDI
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4. Remittances as % of GDP
in Asia Pacific countries (average for 2011-2016)
Data source: World Bank, WDI
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5. Financing need of SDGs
• A critical issue with respect to the implementation of SDGs is the
substantial volume of resources required to finance such
development goals.
• Some estimates show that “$1.4tn a year is needed to reach global
goals for world's poorest” (UN’s Sustainable Development Solutions
Network (SDSN).
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6. SDG costs as percent of GDP (%)
in Bangladesh
Source: GED (2017)
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7. Remittances and SDGs: Channels of impact
• Two major channels:
• At the household level: Poverty, hunger, health, education, safe
water and sanitation
• Remittances are direct transfers to households – received mostly by the
poor households. Help households below the poverty line income to lift
over the poverty line income, increased spending on nutrition, health,
education, safe water and sanitation
• At the macro level:
• Savings – investment – growth
• Impact on labor market
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8. Remittances and SDGs: Empirical evidences (1)
• Both cross-country and country-specific studies
• Issues with cross-country studies
• Focused on either remittance-growth or remittance-poverty rates (macro
picture)
• Better approach is the country-specific studies
• Econometric and CGE studies
• Cross-country panel econometric studies using macro data
• Time series macro-econometric country-specific studies
• Cross-section micro-econometric studies using country-specific household
data
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9. Remittances and SDGs: Empirical evidences (2)
• Remittances reduce poverty:
• A 10 per cent increase in the share of remittances in a country’s GDP, lead to a
reduction of 1.6 per cent of people living in poverty (Uruci and Gedeshi, 2003)
• 1.7 out of the 9 percentage points reduction in the headcount ratio during
2000–2005 was due to the growth in remittances in Bangladesh (Raihan, et al,
2009).
• Remittances increase social spending:
• to buy more goods, including education and health inputs (Rapoport and
Docquier, 2006; Raihan et al., 2017);
• Knowledge transfer and change in attitudes of the remaining family
members of the migrants (Hildebrandt and McKenzie, 2005)
• knowledge about contraceptives.
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10. Remittances and SDGs: Empirical evidences (3)
• Remittances can spur entrepreneurial activity (Yang; 2004; Woodruff
and Zenteno, 2001).
• Increase the investment activities in the recipient country (Asiedu,
2003; Drinkwater et al., 2003; Yang, 2004; Rapoport and Docquier,
2006; Raihan et al., 2017).
• For developing countries remittances are large relative to other
financial flows (Barajas et al., 2009).
• developing countries should capitalize this huge amount of remittance inflows
and use it for investment to promote development and inclusive growth.
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11. Remittances and SDGs: Empirical evidences (4)
• Concerns
• Can contribute to currency appreciation: Dutch disease!
• May negatively affect labour supply: at micro level, studies suggest
mixed results.
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12. Leveraging remittance for implementing SDGs (1)
• Stimulating transfers through formal channels and/or stimulating
capital availability
• Lowering cost of migration and remittance. Cost, speed, ease of making and
receiving the transfer
• Remittance bonds
• Foreign currency accounts Premium interest rate accounts
• Promoting/enabling transfers through microfinance institutions (MFIs)
• Promoting financial literacy/banking the unbanked
• Leveraging remittances for capital market access at the institutional or macro
level
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13. Leveraging remittance for implementing SDGs (2)
• Stimulating investment of remittances
• Outreach through MFI infrastructure
• Outreach through migrants' service bureaus
• Tax exemptions for remittance income
• Incentives to attract diaspora investments with income tax breaks
• Access to foreign exchange and lower duties on imports
• SME schemes (financial, infrastructural, or innovative)
• Training programs
• Matched funding public-private ventures
• Remittances can be attracted to strategic sectors with potential for
productive investment
• Special economic zones?
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14. Leveraging remittance for implementing SDGs (3)
• Addressing migrant workers’ working condition in the destination
countries
• Migrant workers often
• enjoy little social protection,
• face inequalities in the labour market and
• are vulnerable to exploitation and human trafficking.
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15. Questions for discussion
• In your country:
• What are the existing schemes for providing incentives for formal
channeling of remittances? How effective they are? What can be
done further?
• Are there any schemes to stimulate investment of remittances?
How effective they are? What can be done further?
• How are the migrant workers’ working condition in the destination
countries addressed?
• What could be the practical tools to leverage remittance for SDGs?
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