Assessment of the economic functions of remittances on the example of the Republic of Tajikistan

In a majority of developing countries, remittances from labor migrants, being an influential development factor, represent the source of external financing of households and the flow of foreign exchange. Additionally, they are also closely intertwined with achievements in poverty reduction. This article studies the economic function of remittances based on the example of the Republic of Tajikistan as the main supplier country of labor in the post-Soviet space. The example of Tajikistan, a country whose economy is significantly dependent on external procyclical trends, allowed for a more accurate assessment of the functions of remittances. The hypothesis about the investment potential of the financial flows generated by the remittances of migrants was partially confirmed. Based on econometric methods of panel analysis, it has been established that there is a clear correlation between the GDP of a country and its remittances. The provision on remittances' impact on investments was not confirmed, primarily because of their ambiguous impact on financial indicators and exports. The proposed model describes the impact of migrant remittances on the growth potential of the economy, allowing for an explanation of the reasons behind the controversial influence of remittances on the processes of accumulation and investment of capital as well as the extreme difficulty of assessing the financial flows generated by them. © 2019