Are the Direct and Indirect Growth Effects of Remittances Significant?

Abstract

Development economists believe that migrant workers' remittances are an important source of funds for long run growth. Therefore, recent studies have investigated the growth effects of remittances and reached different conclusions. In many such studies the growth of output is simply regressed on both remittances and the channels through which remittances affect growth. Thus there is no distinction between the indirect and direct growth effects of remittances and such specifications may give unreliable estimates because of the correlation between the channels and remittances. In this paper we make a distinction between the indirect and direct effects of remittances.Our model is estimated with panel data of 40 high remittance recipient countries and a system GMM panel data estimation method.

Structure of the EU28 plus ukraine economic region from the growth pole theory perspective

“…For instance, accounting for patent indicator, Germany achieves 1st place with the dominant position representing more than one third out of total. 26 Aggregating all individual polarity measures in one composite indicator (basic with patents and remittances) it can be clearly seen that Germany rules over the EU28 plus Ukraine economic region in the last four years after it has taken over from United Kingdom followed by France, Spain, Poland and then group of relatively smaller countries such as Netherlands, Sweden, Belgium and Luxembourg. The special case of Italy is to be attributed to the differences between PPP and real GDP growth rate based indicators discussed previously.…”

“…25 Basic composite growth pole measure includes growth pole polarity measure, polarity measure of external trade, domestic absorption and FDI flows as defined in part III.I. 26 As the principal component analysis procedure used for computation of composite indicator aims at creating a common component that accounts for most of the common variance in data while excluding specific variance of selected variables the similarities among columns in Table 3 are to some extent expected.…”

Nonlinear growth effect of remittances in recipient countries: an econometric analysis of remittances-growth nexus in Bangladesh

“…The more optimistic group advocate that there exists a positive developmental impact role of remittances, directly or indirectly, because inflow of remittances can lead to accelerated investments in physical and human capital, remove households' credit constraints, protect the economy from different types of shocks and thus contribute towards long-run growth Yang, 2008;Gupta, Pattillo and Wagh, 2009;Giuliano and Ruiz-Arranz, 2009;Chami et al, 2008Chami et al, , 2009Catrinescu et al, 2009;Faini, 2006;IMF, 2005;Rao and Hassan 2012a, b;World Bank, 2005and Siddique et al, 2012. Additionally, remittances can reduce household poverty and accumulate human capital (see; Adams and Page, 2005;Hanson and Woodruff, 2003;Cox-Edwards and Ureta, 2003;Frank and Hummer, 2002;and Hildebrant and Mckenzie, 2005).…”

A Johansen Cointegration Test for the Relationship between Remittances and Economic Growth of Japan

“…This study found that there exist a significant long run positive association between economic growth and remittances in Korea; however, for China a significant negative association existed between economic growth and remittances. Rao and Hassan (2012) explored direct and indirect growth effects of remittances of 40 leading recipient nations. They ascertained that mas.ccsenet.org Modern Applied Science Vol.…”

“…First, remittance has become a vital source of income to developing countries (Rao and Hassan 2012). The GDP per capita of developing countries is lower than that of the developed countries.…”