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How foreign aid and remittances affect poverty in MENA countries?
Riyazuddin Khan1, Zeeshan2, Mohammad Imdadul Haque3
1Department of Geography, Dr. Bhim Rao Ambedkar College, University of Delhi, New Delhi, India.
Plos One
|January 19, 2022
Summary
Foreign aid and remittances significantly reduce poverty and boost income in the Middle East and North Africa (MENA) region. These financial inflows enhance per capita income and the income share of the poorest households.
Area of Science:
- Economics
- Development Studies
- Regional Economics
Background:
- Foreign aid and remittances are crucial income sources for many economies.
- The Middle East and North Africa (MENA) region experiences significant labor immigration and receives substantial foreign aid.
- Understanding the interplay of economic growth, poverty, inequality, remittances, and foreign aid is vital for regional development.
Purpose of the Study:
- To investigate the relationship between economic growth, poverty, inequality, remittances, and foreign aid in MENA countries.
- To determine the impact of remittances and foreign aid on poverty reduction and income distribution within the MENA region.
- To test the hypothesis that remittances and foreign aid augment per capita income and income share in MENA countries.
Main Methods:
- Utilizes panel data methods for analysis.
- Covers the period from 1991 to 2019.
- Focuses specifically on countries within the Middle East and North Africa (MENA) region.
Main Results:
- Remittances, foreign aid, and economic growth are significant factors in reducing poverty in the MENA region.
- An increase in the income share of the lowest quintile was observed, even with negative overall income growth.
- Empirical evidence supports the hypothesis that remittances and foreign aid increase per capita income and income share.
Conclusions:
- Remittances and foreign aid are effective tools for poverty alleviation in the MENA region.
- These financial flows contribute to more equitable income distribution by disproportionately benefiting poorer households.
- The study confirms the positive role of foreign aid and remittances in augmenting economic well-being and income share in MENA countries.
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