The Economic Effects of Cash Transfers from Expatriate Workers

The paper examines the economic effects of cash transfers from Poles working abroad. The authors discuss selected methodological issues, including the treatment of cash transfers in international statistics and problems linked with the interpretation of the data. According to Brzozowski and Szarucki, cash transfers are usually examined in terms of their overall effect, while a more appropriate method would be to look at their net inflow, considering the outflow of funds from another country. Many researchers also tend to forget that such transfers are intended for private purposes, which limits the possibility of using them to spur a country’s economic growth, the authors say. Brzozowski and Szarucki analyze the flow of cash transfers in Poland and elsewhere. Cash transfers from Poles working abroad have increased markedly in recent years, the authors say, because many people have left the country for economic reasons. The greatest inflow of net transfers was recorded in 2007-2008, at around $9 billion annually. Preliminary data for 2009 show that the global economic crisis has considerably reduced the possibility of transferring cash by expatriate workers to their families back home, the authors note. The paper also discusses the results of research into cash transfers and the effects of their inflow in Poland and other countries. The aim is to show the possible consequences of cash transfers for a given economy, including the ways in which these funds could spur economic growth. In countries with relatively well-developed financial systems, cash transfers have led to a significant increase in consumption, while failing to boost investment, Brzozowski and Szarucki say. As a result, it is difficult to expect that such transfers will have a positive impact on economic growth in the longer term, the researchers conclude