Migration and Resilience in the Eastern European Neighbourhood: Remittances as a Mechanism for Boosting Recovery After Shocks

In the particular case of the Eastern Partnership (EaP) countries, migration plays an important role for their development, especially through the remittance channel, as they account for high shares in their gross domestic product (GDP). The geopolitical position of the EaP countries, in between the European Union (EU) and Russia, makes them more susceptible to shocks. Under this framework, this chapter aims at analysing how remittances can build on their resilience, thus acting as a bulwark against natural and political shocks that these countries might face. Running a fixed effects threshold panel data analysis, results indicate that the effect of natural disasters disappears for remittance ratios above 10% of GDP. While remittances also mitigate the impact of political conflicts, their impact is stronger in countries with less freedom. Policymakers should design friendlier remittance policies in order to help population cope with shocks and boost recovery. Nevertheless, as remittances may also cause macroeconomic destabilizing effects, reliance on remittances can be reduced by a shift towards more sustainable sources of growth through an increasing pace in political and economic reforms.