Abstract
The growing pressure on governments to reduce poverty among other Sustainable Development Goals (SDGs) through harnessing domestic and foreign sources has motivated studies on the relationship between poverty and different economic variables in many developing countries. This study investigates the impact of remittance on poverty in Botswana, employing time-series data from 1980 to 2017. The study employs two poverty proxies—household consumption expenditure and infant mortality rate to capture poverty in its multidimensional form and improve the robustness of the results. Using the autoregressive distributed lag (ARDL) approach, the study finds that remittance inflows reduce poverty in Botswana—both in the short run and in the long run when infant mortality rate is used as a proxy. However, when poverty is measured by household consumption expenditure, remittance was found to have no impact on poverty in the short run and in the long run. The study, therefore, concludes that remittance inflows play a crucial role in reducing poverty and that Botswana can benefit immensely from the surge in remittance inflows by putting in place policies and structures that support remittance inflow.
Highlights
The growing need to find a solution to poverty alleviation has resulted in heightened interest from researchers to find the most important economic variable that could serve as a panacea to poverty alleviation
In Model 1, when poverty is measured by household consumption expenditure, remittance is found to have no impact on poverty irrespective of the timing—short run or long run
The findings from this study confirmed that remittance reduces poverty irrespective of the time considered when poverty is measured by infant mortality rate
Summary
The growing need to find a solution to poverty alleviation has resulted in heightened interest from researchers to find the most important economic variable that could serve as a panacea to poverty alleviation. According to Migration Policy Institute (2019), the global monetary transfers from migrants reached $689 billion in 2018 with remittance inflows to low and middle-income countries, taking 77% of the global transfer. The monetary transfers to low and middle-income countries are expected to grow by $21 billion in 2019 and projected to reach $550 billion (Migration Policy Institute 2019). Remittance has grown to be an important source of foreign income besides foreign direct investment and official development assistance (ODA) (Ratha et al 2018).
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