Tuesday, January 13, 2015

13/1/2015: Remittances from Russia: Big Business for Ukraine & Other ex-USSR States

An interesting chart in today's FT summing up the flow of remittances from Russia to other former USSR states:

The above highlights the tragic nature of the Ukrainian crisis. The economic and personal ties between Russia and Ukraine are not just deep - they are fundamental to the structures of both economies and societies.

As a note to the above: World Bank data is most likely underestimating the true extent of the remittances flows. Official figures understate true numbers of Ukrainian (and exclude dual) citizens working in Russia who have family connections back in Ukraine by a factor probably close to 30 percent. In 2013, Russian authorities estimated that of 11.3 million foreigners entering Russia, some 3 million did so to undertake illegal work.

The household remittances from Russia are vastly more significant to the Ukrainian economy than the entire trade with the EU and the US, combined. In effect, Russian labour markets sustain Kiev by simultaneously reducing demand for social funding of the unemployed, and increasing household consumption and investment, with zero input costs. Thus, remittances from Russia account for as much as 3.55% of the total value added in the Ukrainian economy in 2012.

Russia is home to 79.3 percent of the officially-registered migrants from all of the ECA countries, while Ukraine is net sender of some 5.1 million (based on 2013 figures) to other countries, including Russia.

You can read more here: http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934-1288990760745/MigrationandDevelopmentBrief21.pdf

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