Migration, investments and financial services in Georgia

Migration and remittances have the potential to promote development through household investments in entrepreneurial activities and other types of productive investments. This chapter explores if and under what conditions migration is likely to promote investment, and how sectoral policies linked to investments and financial services may affect migration investment decisions in Georgia. The chapter starts by giving an overview of financial inclusion and the investment sector in Georgia. It then examines if and how emigration, return migration and remittances can spur investments in entrepreneurship and real estate assets. Finally, the chapter discusses the role of public policies, particularly sectoral policies related to financial inclusion and financial training, for remittance decisions. The chapter concludes with a discussion on the policy recommendations of the findings.

T he potential positive effects of migration and remittances on investments in the origin country have been acknowledged in research as well as by policy makers. The new 2030 Agenda for Sustainable Development recognises the positive contribution of migrants and diaspora to sustainable development, and commits to ensuring that affordable financial services are available to migrants and their households, as well as to reducing remittance transfer costs (uN, 2015). Migration and remittances can help overcome financial constraints and stimulate long-term investments, especially in countries where access to credit is limited and formal financial markets are underdeveloped. Sectoral policies linked to investments and financial services may also play an important role in enhancing the positive impacts of migration on productive investments. This chapter investigates some of these linkages in the context of Georgia.

Remittances contribute significantly to Georgia's gross domestic product (GDP), constituting 10% of the national income in 2015 (World Bank, 2016). Remittances, together with human and financial capital brought back by return migrants, are hence important sources of income for the country. understanding if and under what conditions remittances and return migration promote investment is important to enhance the well-being effects of migration for households as well as the wider economy.

The chapter starts by giving an overview of the investment and financial service sector in Georgia, and then moves on to examine the impact of migration on business and real estate investments. The third section looks at the role of public policies related to investment and financial services on remittance patterns, followed by a concluding section that discusses some policy recommendations of the findings.

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