| Description |
The volume of remittances in Georgia has been growing every year since 2001, but so has the size of the economy. This means that the share of remittances fluctuated at 5-7 percent of GDP, 2001-2010. Survey data indicate that one-tenths of households receive emittances, while the size of a typical monthly transfer amounts to 265 GEL (149 USD), most of it delivered via formal money transfer systems. There is a positive association between economic growth and remittances, but the causal effect is apparently limited to trade services because, on average, 80 percent of received transfers is spent on primary consumption. Remittances are linked to a households’ propensity to save and to have bank accounts and the higher interest in various investment options. Remittances have nly a marginal impact on small business activity in rural recipient households and are associated with lower employment chances. Linkage between inflation and remittance is vague. However in those months when remittances increase, the monthly inflation rates, typically, decrease. Recipient households spend more on education and healthcare and urban recipients also report higher subjective health status and educational enrollment. The effect on inequality and poverty is not straightforward because households in the middle income range benefit disproportionately from remittances. Still, the regions with the higher rates of recipient households do experience lower levels of poverty, while individuals from recipient households have higher subjective and objective perceptions of welfare. Remittances arguably create moral hazard, at the public level, as the elderly and the poorest are less likely to be remittance recipients. This coincides with the social policies implemented, 2004-2012 , when the increase of old-age pensions and the ntroduction of targeted social assistance became a priority for the government.
|