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Mba Business Government Society

In: Business and Management

Submitted By Jeroen1979
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William Border is a senior fellow at the Center for Global Development where he leads the Migration and Development Initiative. His current research focuses on the effects of international migration, and on rigorous impact evaluation for aid projects. Much of his current work focuses on development and covers topics including the impact of international aid and policymaking on education equality outcomes, as well as the post-2015 development agenda, the role of technology in quality of life improvements, and governance and anticorruption.

It is commonly believed that BD results in a decrease in tax revenue to the government...

I actually have a different view on this matter.
From the remittances is it first of all the households that are benefitting from it, but secondly the government is benefitting as well.
I will explain this in more detail. The remittances spent on the consumption of both domestically produced goods and imports increase the tax base, which in turn increases revenues from sales taxes, value-added taxes and import duties and other indirect taxes. (stroomdiagram)

With the remittances, the individuals/society determine their spending priorities as opposed to the agenda of the government as is the case with taxes and foreign aid.
Besides this, governments are now able to increase their debts, because of the constant inflow generated by tax, or governments can spend more on infrastructure. (Abdih et al, 2012)
In other words, remittances can provide the (indirect) tax revenues (increase), which allowed some countries to increase spending. This effect is explained in more detail as the (Keynesian) multiplier effect. (Lowell, 2001), (Clemens, 2013), (Ebeke, 2010).

Actually, Sophie, that brings up an interesting point. Many people don’t realise just how significant the contribution of remittances is to the GDP of a…...

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