Differential Impacts of Foreign Capital and Remittance Inflows on Domestic Savings in Developing Countries: A Dynamic Heterogeneous Panel Analysis

Abstract

The study examines the role of foreign capital and remittance inflows in the domestic savings of 63 developing countries for 1971–2010, paying attention to likely differential effects of FDI, portfolio investment, foreign aid and remittances. The conventional homogeneous panel estimates suggest that foreign aid and remittance flows have a significant negative impact on domestic savings. However, these techniques ignore cross‐section dependence and parameter heterogeneity properties and hence yield biased and inconsistent estimates. When we allow for parameter heterogeneity and cross‐sectional dependence by employing Pesaran's () Common Correlated Effects Mean Group estimator technique, only remittances crowd out savings.

Analyzing the Impact of Foreign Capital Inflows on Domestic Savings in Pakistan: A Comprehensive Time Series Investigation

“…in less developed countries like Lebanon. Hossain (2014) analyzed the impact of foreign capital inflows on domestic savings in developing countries. The researcher used the panel data from the period 1971 to 2010 and applied the common correlated effects mean group (CCEMG) technique.…”

Analyzing the Impact of Foreign Capital Inflows on Domestic Savings in Pakistan: A Comprehensive Time Series Investigation

“…in less developed countries like Lebanon. Hossain (2014) analyzed the impact of foreign capital inflows on domestic savings in developing countries. The researcher used the panel data from the period 1971 to 2010 and applied the common correlated effects mean group (CCEMG) technique.…”

Capital Mobility and the Feldstein–Horioka Puzzle: Re ‐Examination of Arab Countries 1980-2018

“…، (Agrawal, 2001;Edwards, 1996;Hussain and Brookins, 2001;Loayza et al, 2000;Reinhart and Talvi, 1998;Uthoff and Titelman, 1998) ‫تؤكد‬ ‫التي‬ ‫اسات‬ ‫الدر‬ ‫مل‬ ‫ادد‬ ‫هناك‬ ‫ل‬ ‫المقا‬ ‫في‬ ‫الم‬ ‫ت‬ ‫أي‬ ‫مكل‬ ‫األجنبي‬ ‫المال‬ ‫أس‬ ‫ر‬ ‫تدفقات‬ ‫أي‬ ‫ؤدي‬ ‫التنمية‬ ‫لتمويل‬ ‫كمصدر‬ ‫النامية‬ ‫البلداي‬ ‫في‬ ‫ة‬ ‫ا‬ ‫لل‬ ‫ا‬ ‫م‬ ‫م‬ ‫ا‬ ‫دور‬ ‫اسات:‬ ‫الدر‬ ‫هذه‬ ‫مل‬ (Athukorala and Sen, 2002;Baldé, 2011;Caceres and Saca, 2006;Chen, 1977;Holmes, 2005;Hossain, 2014;Osili, 2007;Rana and Dowling, 1990;Waheed, 2004) ‫األجنبي‬ ‫المال‬ ‫أس‬ ‫ر‬ ‫تدفقات‬ ‫م‬ ‫تس‬ ‫في‬ ‫يا‬ ‫جا‬ ‫إ‬ ‫خالل‬ ‫مل‬ ‫االقتصادي‬ ‫النمو‬ ‫االدخار‬ ‫فجوة‬ ‫تقليص‬ ، ‫االستامار‬ ‫و‬ (Khan, 2007) ‫اإلنتاجية‬ ‫يادة‬ ‫ز‬ ‫؛‬ (Ozturk, 2007) ‫المتقدمة‬ ‫التكنولوجيا‬ ‫نقل‬ ‫؛‬ (Balasubramanyam et al, 1996) ‫الجديدة‬ ‫األامال‬ ‫يادة‬ ‫ر‬ ‫؛‬ (Khan, 2007 )…”