Migration: An Attractive Insurance Option in African Countries?

AuthorAhmat Jidoud
Pages1-4
IMFIMF
Volume 16, Number 2 June 2015
www.imf.org/researchbulletin
B U L L E T I N
1
Investment in Emerging Markets
Nicolas E. Magud and Sebastián Sosa
In our working paper on investment in emerging
markets (2015) we document that (i) although
private investment growth in eme rging markets
has decelerated in recent ye ars, it came down
from cyclical highs and remain s close to precrisis
trends; and (ii) investment-to-output ratios
generally remain close to or above histor ical averages. Investment is positively
related to expected f uture profitability, cash f lows and debt flows, and negatively
associated with leve rage. Critically, it is also positively related to (country-s pecific)
commodity export pr ices and capital inflows. The latte r help to relax firms’
financial constraints , which tend to be stronger for smaller firms and those le ss
integrated with international f inancial markets. Lower commodity export p rices
and expected profitabil ity, a moderation in capital inflo ws, and an increased
leverage account for the bulk of the recent invest ment deceleration. Looking
forward, prospects for a recove ry of business investment are not promising.
Migration: An Attractive Insurance Option in
African Countries?
Ahmat Jidoud
Over the last two deca des, officially recorded remittances
(migrants’ transfers) toward African countries have reached
substantial amounts. Thi s paper assesses whether these f lows
help to cushion the impact of mac roeconomic shocks in these
countries and expl ores the channels through which these f lows
affect macroecon omic volatility. The empirical result s show that
remittances significa ntly reduce output and consumption volatilitie s by absorbing
a significant amount of GDP shocks, but the ir effect on consumption fluct uations
is less pronounced. A s mall, open–economy mode l augmented with remittances
shows that the stabilizing ef fects of remittances are higher in economies where (i)
remittances induce no wealth ef fect on labor supply, and (ii) help with promoting
financial developme nt by lessening financial frictions .
ere has been widespread empirica l work on the impact of remittances on
African cou ntries, both from a microeconomic and macroeconomic perspect ive
in recent years. Althoug h signicantly underestimated , ocially recorded
In This Issue
1 Migration: An Attractive
Insurance Option in
African Countries?
1 Investment in Emerging
Markets
6 Q&A: Seven Questions
on Islamic Finance
10 IMF Working Papers
13 IMF Economic Review
14 Recommended Readings
from IMF Publications
15 Staff Discussion Notes
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Research Summaries
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