September 28, 2012

The Aid Workers Really Help Ukraine and Georgia

I have already written that in a single year Ukraine's economy received more dollars from international remittances than Ukraine's economy received in foreign aid in almost ten years (of course, I adjusted both amounts for inflation). International remittances that are essentially money transfers via MoneyGram, Western Union and similar financial institutions are becoming a pretty significant part of Ukraine's economy. As shown in this graph, international remittances and net foreign direct investments represented the same share of Ukraine's GDP in 2009. In 2010 the total amount of international remittances constituted $5.6 billion (4.1% of GDP) or $122 per capita.
It is interesting fact that another former Soviet state, Georgia, received around $280 per capita in international remittances. The GDP share of international remittances is also higher in Georgia than it's in Ukraine. In Georgia the international remittances represent almost 8% of GDP or somewhere between $1.1 and $1.3 billion. 
Overall, it does look like international remittances are becoming another significant source of cash flow in both post-Soviet countries. I agree with ISET's Givi Melkadze that international remittances serve at least two objectives: one, consumption, and, two, investment. I think that international remittances are more biased towards consumption. Anyways, it will be interesting to get more data about international remittances.   


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