Determinants and impacts of international remittances on household welfare in Vietnam

Abstract

Remittances can potentially help to promote economic development by providing a mechanism to share risks, reduce poverty and improve equality. However, from the viewpoint of economic theory the overall impacts of remittances are uncertain, as different mechanisms lead to opposite impacts. Since the 1990s Vietnam has experienced a dramatic growth in remittance flows from abroad. Vietnam is a unique case for study, as economic motives historically played a smaller role in outward migration than in other countries. Fortunately, household survey data are available for this time period, allowing for a detailed analysis of the impacts of international remittances on Vietnam. Specifically, we examine the characteristics of recipients and the impacts of international remittances on economic inequality and poverty. We conclude that international remittances are helping to improve equality. For this reason, new development policies must also account for their potential impacts on remittance flows. © UNESCO 2010.