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Mr. Milan M Cuc, Mr. Erik J. Lundback, and Mr. Edgardo Ruggiero

Abstract

In today’s globalized world economy, economic integration goes beyond international trade and capital movements, and increasingly involves international labor mobility. An interesting illustration of this trend is Moldova, where large-scale labor emigration and associated workers’ remittance flows have played a dominant role in shaping the economic evolution in recent years. Although in Moldova much of the impetus for labor migration has come from unfavorable domestic conditions, the phenomenon is part of a wider trend of a growing movement of temporary and skilled workers across national borders.

Mr. Milan M Cuc, Mr. Erik J. Lundback, and Mr. Edgardo Ruggiero

Abstract

The growing body of literature on migration and remittances provides a useful framework to analyze these phenomena in Moldova, as well as to help with policy conclusions and recommendations.1 Analytically, this literature can be organized around three main topics: motivation behind remittances, use of remittances, and macroeconomic impact of migration and remittances.

Mr. Milan M Cuc, Mr. Erik J. Lundback, and Mr. Edgardo Ruggiero

Abstract

This chapter reports on the results of a survey of migration and remittances in Moldova. The survey was sponsored by the Chişinău offices of the International Organization for Migration and the Food Security Program of the European Commission, and developed by a survey agency (CBS AXA) in cooperation with the IMF resident representative office and the two sponsors. CBS AXA conducted the interviews, the focus groups, and the survey itself during September–November 2004.3

Mr. Milan M Cuc, Mr. Erik J. Lundback, and Mr. Edgardo Ruggiero

Abstract

The preceding section explored the motivation behind labor migration and remittances and their use in Moldova. This chapter turns to their macroeconomic consequences, introducing the topic by first looking at how the relevant economic concepts are defined, measured, and accounted for in the balance of payments statistics. Using Moldova balance of payments data, we present a few key stylized facts about Moldova that complement the detailed results of the household survey presented earlier. Discussion of macroeconomic consequences of labor migration and remittances follows.

Mr. Milan M Cuc, Mr. Erik J. Lundback, and Mr. Edgardo Ruggiero

Abstract

What challenges do remittances and labor migration pose for policymakers? Chapter 3 provided insights into what motivates Moldovans to seek employment abroad and how they make decisions about the amount and use of remittances. Chapter 4 discussed broader ramifications of these decisions for the performance of Moldova’s economy. Now we will discuss how policies can (1) influence decisions about labor migration and remittances, and (2) deal with risks that remittance inflows pose to macroeconomic stability.

Mr. Milan M Cuc, Mr. Erik J. Lundback, and Mr. Edgardo Ruggiero

Abstract

The behavior of Moldovan migrants is consistent with the stylized facts from the literature on the motivation behind remittances. In particular, Moldovan migrants appear to have a strong attachment to their home country and remit large portions of their earnings to their families. Thus, in the short to medium term, remittances are likely to remain a stable source of foreign exchange. Remittances are also likely to continue to boost household demand for consumption and investment in housing, as well as to provide a well-targeted social safety net. In the long term, as more migrants settle abroad, portfolio choice may become more important and migrants may decide to start saving and investing in their host country rather than remitting funds home.

International Monetary Fund. External Relations Dept.

The paper highlights that over the past century, access to education has increased enormously, illiteracy has fallen dramatically, and a higher proportion of people are completing primary, secondary, or tertiary education than ever before. But huge problems remain. About 115 million children of primary school age are not currently enrolled in school. Most are illiterate and live in absolute poverty—the majority female. Some 264 million children of secondary school age are not currently enrolled, and the quality of schooling is often low.

International Monetary Fund. Research Dept.

The research summaries in the March 2012 issue of the IMF Research Bulletin are "Foreign Direct Investment and the Crisis: Is This Time Different?" (by Yuko Kinoshita) and "Food Prices and Inflation" (by James P. Walsh). The Q&A covers seven questions on "Unemployment through the Prism of the Great Recession" (by Prakash Loungani). This issue also launches a new feature "Conversations with Visiting Scholars" with an interview with Tom Sargent, winner of the 2011 Nobel Prize in Economic Sciences. Also included in this issue are details on visiting scholars at the IMF, a listing of recently published IMF Working Papers, and information on the next issue of "IMF Economic Review."

International Monetary Fund

This paper discusses Turkey’s Request for Stand-By Arrangement (SBA) and Extension of Repurchase Expectations. Turkey’s economic program has delivered impressive results. Output has grown rapidly, inflation has fallen to its lowest level in a generation, and government debt has declined markedly. However, significant vulnerabilities remain. The authorities have prepared a three-year economic program for which they are seeking the support of the IMF. Implemented successfully, the program should help Turkey converge toward the economies of the European Union and exit successfully from IMF financial support.

International Monetary Fund

Prudent macroeconomic policies helped Turkey to achieve economic growth under the Stand-By Arrangement. Executive Directors welcomed this development and stressed the need to widen the account deficit. They emphasized the need of a strong budget, powerful monetary and fiscal policies, and structural reforms to sustain economic growth and reduce vulnerabilities. They urged to strengthen the banking supervision and international reserves. They welcomed the revised program and agreed that its full implementation would help in sustaining economic growth.