John Gibson, John and Gibson, Geua Boe and David McKenzie, David and Rohorua, Halahingano (2007) Efficient remittance services for development in the Pacific. Asia-Pacific Development Journal, 14 (2). pp. 55-74. ISSN 1020-1246
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Abstract
Capital inflows to the Pacific islands from aid, foreign investment and
remittances are an important source of development finance.
Remittances are the fastest growing; they now total US$ 400 million
per year and can be expected to grow even further as labour mobility
is used to deal with seasonal labour shortages in Australia and New
Zealand and limited job opportunities in the Pacific. The transaction
costs of sending remittances to the Pacific islands are very high for the
most widely used methods. This paper examines the New ZealandTonga
remittance corridor, where typical transactions involve costs in
the order of 15 to 20 per cent for bank drafts and transfers through
money transfer companies such as Western Union. Cheaper transfer
methods using automated teller machines (ATMs) are feasible and have
transaction costs of less than 5 per cent but are not widely used. This
spread of 10 percentage points between the most popular and the
cheapest remittance methods means a potential loss for Tonga of the
equivalent of 4 per cent of GDP. Extrapolating from this remittance
corridor to the rest of the Pacific, avoidable transaction costs may total
US$ 40 million per year. Hypotheses about the continued reliance on
high transaction cost methods are examined and implications for
development policy are discussed.
| Item Type: | Journal Article |
|---|---|
| Subjects: | H Social Sciences > H Social Sciences (General) |
| Divisions: | Faculty of Business and Economics (FBE) > Graduate School of Business |
| Depositing User: | Generic Email |
| Date Deposited: | 06 Mar 2018 00:58 |
| Last Modified: | 06 Mar 2018 00:58 |
| URI: | https://repository.usp.ac.fj/id/eprint/10576 |
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