THE IMPACT OF REMITTANCES ON ECONOMY OF KYRGYZSTAN

Abstract

Data of the worker‘s remittance flow in the period of 2000-2010 were employed to analyze the impact of remittances on macroeconomic indicators of the Kyrgyz Republic. To study the underlying issue, linear correlation method was used. Results showed that great portion of remittances has been directed into consumption rather than to investment. Moreover, remittance spending is channeled into consumption of imported goods, thus raising the trade deficit of a country. Their impact on economic effectiveness of Kyrgyzstan presents that given the low propensity to invest, they finance consumption and cause high consumption ratio with respect to investment ratio

Keywords

• remittance, labor migration, macroeconomic indicators, linear correlation method, investments, economic effectiveness

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