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Working Paper 200 - Analysis of Household Expenditures and the Impact of Remittances using a Latent Class Model: the Case of Burkina Faso
Migrant remittances have become a major and stable source of foreign exchange revenues in many African countries. The estimated official net inflow of remittances to Africa reached USD40 billion in 2010 (Mohapatra and Ratha 2011), yet this figure is understated due to the prevalence of unofficial remittances. During the past decades, international remittances have not only been increasing in importance but have also remained resilient and stable compared to other sources of foreign exchange. For instance, in Sub-Saharan-African (SSA) countries, during the recent financial crisis, migrant remittances decreased by about 4% while Official Development Assistance (ODA) decreased by 50% in the same period. Examining the impact of remittances on migrants’ countries of origin has been the subject of numerous studies. Remittances can have profound impacts on poverty alleviation, income distribution and economic growth in developing countries. They affect not only the recipient country’s macro level indicators but also have major impacts on recipient households’ living conditions.