Remittances: Trends and Impact on Ukraine’s Gross Domestic Product

This article examines the impact of remittances on the Ukraine’s gross domestic product (GDP). It compares the volumes of remittances and foreign direct investment as a component of GDP and assesses how remittances are utilized. This study uses official data and materials from the State Statistics Service of Ukraine, the National Bank of Ukraine, and several international organizations. It applies general scientific methods (analysis, synthesis, generalization, comparison) and special methods, including economic and statistical analysis, correlation and regression analysis, as well as econometric tools. The study estimates the impact of remittances on GDP through consumption and investment. Using R software, the analysis models the effects of remittances and foreign direct investment on GDP. It also measures the correlation between independent variables (remittances and foreign direct investment) and evaluates their respective impacts on GDP. The study tests the adequacy of the model and estimates how a USD 1 billion change in remittances or foreign direct investment affects GDP. The study’s relevance lies in the significant role remittances play in GDP formation and economic stability, especially during economic crises. The findings show that remittances are a vital source of financial inflows, primarily supporting consumer demand. The research’s novelty comes from its innovative approach, combining both quantitative and qualitative analyses of remittances concerning to economic indicators. The main findings indicate that most remittances come from migrant workers. Official statistics do not fully reflect the scale of permanent emigration, and data on labor migration are fragmentary, complicating analysis. Remittances drive growth in consumer demand and investment, both components of GDP, according to its calculation formula. Migrant remittances are largely allocated to consumer spending, while the share of funds invested in business development is minimal. In recent years, remittances have mostly grown, surpassing foreign direct investment despite global and regional shocks. Both remittances and foreign direct investment contribute to GDP growth. After 2014, changes in migration patterns increased the share of informal remittances.