Purpose of Study:
- To Quantify the effects of natural disasters on remittance inflows to Jamaica
- The researcher utilized quarterly time series data ranging from 1998 to 2010
- The data was obtained from the Bank of Jamaica, EM-DAT and The Bureau of Economic Analysis in the United States.
- The results indicate that in the presence of a natural disaster in a given quarter, remittances would increase by an additionally 0.044% in that same quarter.
- However, when the cost of a natural disaster is measured against total remittance inflows, we found that there was no statistical relationship – no real relationship between the damage inflicted by a natural disaster and the level of remittance inflows.
- This result can be explained by the fact that natural disasters have an adverse effect on the income of households in Jamaica and as a result, it has propelled migrants abroad to increase the amount of remittances they send to their family and friends.
- Clark & Wallsten (2003) found that remittances increased by approximately 25 cents for every dollar of damage the hurricane inflicted on the household in Jamaica.
- Due to Jamaica’s vulnerabilities to natural disasters and given the limited financial resources that are available to the government and private citizens, it is paramount that the country tries to maximize its available resources in order to mitigate the effects of natural disasters.
- Consequently, this paper proposes that the government should put in place the necessary institutions and structures in order to enhance the levels and use of remittances. These includes: providing more competition in the international money transfer market; providing an avenue for the participation of members in the Diaspora to participate in the affairs in the country; and providing the incentives for persons to used their remittances as insurance against natural disasters.
Application of this study:
- Over the period 2000 to 2010, natural disasters have cost Jamaica US$ 1,528.205 million in damages. Thus, natural disasters have a significant effect on economic growth and development in Jamaica.
- Remittances are readily available resources, as it can provide an income for disaster affected households and thus it can act as an insurance against natural disasters. Most importantly, it can enhance the individuals’ ability to build disaster resistant houses and also help businesses to recover quicker in the advent of a natural disaster.
About the author: Tarick Blake has a Msc. Economics degree from UWI Mona and is current an Economist Intern at the Central Bank of Trinidad & Tobago. His interests are investments banking and Economics. He is currently conducting a research on behalf of the Central Bank of Trinidad & Tobago: Title of the Paper: Seasonal adjusting Monetary and Real Sector Series in Trinidad & Tobago
For further information about the above research:
Contact the author: firstname.lastname@example.org
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