The Impact of Migrant Remittances on Economic Growth: Evidence from South Asia

PurposeThe purpose of this paper is to empirically assess the impact of remittances on the economic performance of the 16 Asian developing countries, taking account of their institutional qualities.Design/methodology/approachA panel of 16 Asian developing countries (Central Asia, South Asia, and ASEAN) over the period of 2002–2016 is employed in the analysis. To assess the impact of remittances on economic performance in consideration of institutional quality, OLS estimates as well as GMM are used.FindingsThe effect of remittances on economic growth is statistically significant. In addition, they also impact economic growth when they interact with institutional or financial development variables. For the long-run growth process of Central Asian, South Asian, and ASEAN countries, a sound and smooth institutional framework appears to be indispensable. Also, it was found that more fragile economies tend to achieve bigger growth than less fragile economies, as this kind of growth is triggered by more remittances flowing into fragile economies. However, the impact of remittances on growth does not depend on the level of ICT. FDI and financial development have positive impact on growth.Research limitations/implicationsThere are limitations to this research as well. Due to the unavailability of data, several countries had to be removed from this study. The cost of sending money might be an important variable for this study. However, the data on this variable from reliable sources are almost impossible to gather. Therefore, this variable is also not included in this research. The savings from remittances when intermediated through formal financial channels will, in fact, produce a positive allocation and distribution of resources that may eventually become an important source of growth. However, one precondition for larger and greater growth is that remittances need to be well and properly utilized by the financial sector. Therefore, quality institutions should be formed first, which can facilitate investment activities and make the flow of remittances more convenient.Originality/valueThis paper exclusively considers the case of Asian developing countries (Central Asia, South Asia, and ASEAN) to assess the impact of remittances on the economic performance of these countries, with special consideration of the interaction effects of remittances and institutional quality in these emerging Asian economies. The previous studies on the effect of remittances on growth do not conform to one concrete conclusion. This study is undertaken in a bid to get the best possible result on the impact of remittances on the growth of the selected countries, majority of which attract substantial chunk of remittances into their economies.

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The Impact of Ageing Population on Economic Growth in South Asia

Asian Social Science ◽

10.5539/ass.v15n7p70 ◽

2019 ◽

Vol 15 (7) ◽

pp. 70

Author(s):

D.K.Y. Abeywardhana

Keyword(s):

Economic Growth ◽

South Asia ◽

South Asian ◽

Ageing Population ◽

The South ◽

Healthcare Facilities ◽

Main Challenge ◽

Working Age ◽

Working Age Population ◽

The Impact

The share of working age population has declined all over the world. It is forecasted that this will continue for the coming years in all countries in South Asia. Low growth in working age population in South Asia will be effecting negatively for the economic growth. This paper studies whether the South Asia 2050 employment targets would be sufficient to compensate for the downward impact of demographic burden and whether the impact of demography on economic growth differs between South Asian countries. The results show that degreasing working age population is the main challenge the South Asian region faces. Further it shows that growth in GDP mainly depend on the demographic change. Population who contributed the economic development become maturing and dependents of their children. The consumption of the ageing population is very high as of higher spending on healthcare facilities. This effect badly on the economic growth in the region and cause lots of challenges to the nations.

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The Impact of Migrant Remittances on Economic Growth in Arab Countries

Journal of Economics and Public Finance ◽

10.22158/jepf.v5n2p188 ◽

2019 ◽

Vol 5 (2) ◽

pp. 188

Author(s):

Habib Ouni ◽

Hela Miniaoui

Keyword(s):

Economic Growth ◽

Potential Role ◽

Dynamic Panel Data ◽

Arab Countries ◽

Consumption Expenditure ◽

Gulf Region ◽

Dynamic Panel ◽

Migrant Remittances ◽

Using Data ◽

The Impact

The potential role that workers’ remittances are likely to play in promoting economic growth, especially in Arab countries, is currently attracting considerable attention. These remittances have an impact on the remitting economies as well. The Gulf region is considered one of the top sending countries of migrant remittances. In this study, empirical analysis is carried out with panel techniques using data over the last three decades for six Arab countries. Our results show that migrant remittances have a positive and significant impact on economic growth. This relationship is also significant when we use dynamic panel data. An indirect effect of remittances on economic growth is pointed out especially via the investment and the household final consumption expenditure channels. Policymakers in Arab countries should take appropriate policy actions to increase the outflow of workers. Developed capital markets, as well as a sound macroeconomic policy environment, would provide incentives for sustainable remittances transfers.

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Linkages between Financial Development and Economic Growth in the Middle-Income Countries of South Asia: A Panel Data Investigation

Vision The Journal of Business Perspective ◽

10.1177/0972262920923908 ◽

2020 ◽

Vol 24 (2) ◽

pp. 140-150 ◽

Cited By ~ 1

Author(s):

Rajesh Sharma ◽

Pradeep Kautish

Keyword(s):

Economic Growth ◽

Stock Market ◽

South Asia ◽

Banking Sector ◽

Sustainable Growth ◽

Gdp Growth ◽

Middle Income ◽

Middle Income Countries ◽

Long Run ◽

The Impact

The present study intends to investigate the impact of financial sector development on GDP growth in the four middle-income countries of South Asia over the period of 1990–2016. Using pooled mean group (PMG) estimation, this study tries to examine whether in these developing countries, GDP growth has been influenced by size of market capitalization and size of market turnover in the long run which are used as proxy for stock market development. Similarly, domestic credit to private sector is used as proxy for banking sector development while assessing its long-run impact on GDP growth. Furthermore, by incorporating a dummy variable for the global financial crisis (2007–2008), this study investigates whether these economies are vulnerable to external shocks or not. The outcomes of this study find that relatively, the impact of banking sector on GDP growth has remained low in the region. Nevertheless, the development in both sectors has positively influenced economic growth in the long run. The outcomes of this study suggest that both, i.e. stock market and banking sector, are vital determinants of long-run economic growth in the South Asian countries. Therefore, to achieve the sustainable growth, policymakers need to adopt the global approach which can be ensured by improving the quality and scope of financial services in these countries.

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The Impact of Remittances on Poverty Alleviation in Selected Emerging Markets

Comparative Economic Research ◽

10.2478/cer-2018-0011 ◽

2018 ◽

Vol 21 (2) ◽

pp. 51-68 ◽

Cited By ~ 4

Author(s):

Kunofiwa Tsaurai

Keyword(s):

Economic Growth ◽

Emerging Markets ◽

Fixed Effects ◽

Poverty Reduction ◽

Ordinary Least Squares ◽

Income Per Capita ◽

Per Capita ◽

Migrant Remittances ◽

The Impact ◽

Poverty Levels

The study explored the impact of remittances on poverty in selected emerging markets. On the theoretical front, the optimistic view argued that remittances inflow into the labour exporting country reduces poverty whereas the pessimistic view proponents said that remittances dependence syndrome retards both economic growth and income per capita. Separately, using two measures of poverty [the poverty headcount ratio at US $1.90 and US $3.10 a day (% of population)] as dependent variables, the fixed effects approach produced results which supported the remittances led poverty reduction (optimistic) hypothesis whereas the pooled ordinary least squares (OLS) framework found that remittances inflow into the selected emerging markets led to an increase in poverty levels. The implication of the findings is that emerging markets should put in place policies that attract migrant remittances in order to reduce poverty levels. They should avoid over‑reliance on remittances as that might retard economic growth and income per capita.

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Consumption-Savings Trade-Off in the Allocation of Migrants; Remittances and Economic Growth: The Cases of Burkina Faso and Senegal

Global Journal of Human-Social Science ◽

10.34257/gjhssevol20is3pg11 ◽

2020 ◽

pp. 11-20

Author(s):

Samuel Maxime Coly ◽

François Joseph Cabral

Keyword(s):

Economic Growth ◽

Burkina Faso ◽

Computable General Equilibrium ◽

Methodological Approach ◽

West African ◽

Economic And Monetary Union ◽

Cge Modeling ◽

Migrant Remittances ◽

The Impact ◽

Dynamic Computable General Equilibrium

The objective of this research is to assess the impact on growth of reallocating migrant remittances for savings/investment purposes. It focuses on two countries in the West African Economic and Monetary Union (WAEMU)' zone (Burkina Faso and Senegal). The methodological approach adopted is dynamic Computable General Equilibrium (CGE) modeling that integrates a procedure for reallocating remittances. Simulation results show that an increase in the propensity to save as a result of reallocation of remittances received by households for savings purposes leads to an increase in economic growth.

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The Effect of Remittance, Consumption, and FDI on Economic Growth in ASEAN Countries

EKO-REGIONAL JURNAL PENGEMBANGAN EKONOMI WILAYAH ◽

10.20884/1.erjpe.2021.16.2.1855 ◽

2021 ◽

Vol 16 (2) ◽

Author(s):

Mega Mariska ◽

Lies Maria Hamzah ◽

Arivina Ratih

Keyword(s):

Economic Growth ◽

Panel Data ◽

Migrant Workers ◽

Random Effect ◽

Random Effect Model ◽

Data Set ◽

Asean Countries ◽

Migrant Remittances ◽

The Government ◽

The Impact

One of the main indicators seen in reviewing the relationship between international workers and economic growth is remittances. Remittances obtained from workers abroad are one of the major sources of finance for developing countries. Remittances are also a source of finance in increasing migrant household incomes which encourage improved consumption which will affect economic growth. This study was conducted to explore the impact of migrant remittances, consumption and FDI on economic growth in 10 ASEAN countries using annual panel data from 2015-2019. This study uses panel data regression analysis with the Random Effect Model (REM) approach. The results showed that remittances, consumption and FDI positively and significantly contributed to economic growth in 10 ASEAN countries. Significant contribution of migrant remittances in economic growth if their use is directed to more productive sectors such as use in the investment sector can help the economies of ASEAN countries to maintain and increase economic growth. The government needs to improve the quality of migrant workers through education because a high level of education will affect the level of wages received by migrants and will have an impact on increasing remittances. The limitation in this study is the use of limited data, for 2020 it is not included in the data set used in the analysis. For this reason, further research should use 2020 data because in 2020 there be a new phenomenon, namely COVID-19 which can be traced to the impact of this phenomenon on remittances. Keywords: Remittances, Migrant, Economic Growth, Panel Data

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THE INTERACTIVE EFFECTS OF REMITTANCES ON ECONOMIC GROWTH AND INEQUALITY IN WESTERN BALKAN COUNTRIES

Journal of Business Economics and Management ◽

10.3846/jbem.2021.14587 ◽

2021 ◽

Vol 22 (3) ◽

pp. 757-775

Author(s):

Ujkan Q. Bajra

Keyword(s):

Economic Growth ◽

Migrant Workers ◽

Interactive Effect ◽

Strong Support ◽

Interactive Effects ◽

Western Balkans ◽

Migrant Remittances ◽

The Individual ◽

High Level ◽

The Impact

Hardly any studies have investigated the impact of migrant remittances on economic growth (EG) and inequality in the Western Balkans as a whole (WB6). Using the method of instrumental variables (VI), the findings show that while remittances influence economic growth, their inflow also promotes a high level of migration and absorbs a large workforce by influencing the labor market and encouraging uncontrolled individual relocation. This paper also reveals that although remittances have eased income inequalities the share of remittances in a country’s economy has declined over the years. After testing for the endogeneity of remittances and controlling for various variables, the results indicate that migrant workers’ remittances do not provide strong support for economic growth and inequality. For the sample average, a 1-percent rise in the share of remittances in the economy (i.e., to GDP) will lead to a 0.10-percent rise in the economic cycle i.e. GDP growth, respectively will lead to a 0.05-percent drop in the share of people living in inequality. The findings also show that the interactive effect of remittances and foreign direct investment is lower on economic growth and inequality than the individual effect of each factor.

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THE IMPACT OF COVID-19 ON THE SOCIO-ECONOMIC STABILITY OF THE MIDDLE CLASS

International scientific journal Internauka Series Economical Sciences ◽

10.25313/2520-2294-2021-8-7512 ◽

2017 ◽

Author(s):

Yuliia Chaliuk ◽

Keyword(s):

Economic Growth ◽

Sustainable Development ◽

Middle Class ◽

South Asia ◽

Sub Saharan Africa ◽

Asia Pacific ◽

Economic Stability ◽

Sustainable Development Goal ◽

Development Goal ◽

The Impact

The middle class is the basis of socio-economic stability of the state, acts as a generator of economic, social, cultural and institutional transformations. The consumption model of this class is above the subsistence level, which allows them to invest in production activities, to accumulate physical and human capital. Increasing income leads to increased spending on health and education, leisure and entertainment, leads to an increase in the range of consumer goods. Quantitative and qualitative parameters of the middle-class assessment serve as a platform for characterizing living standards and redistribution of economic growth in the country. The tasks of expanding the middle class, combating poverty, smoothing socio-economic asymmetries and imbalances, and improving the well-being of the population are at the heart of the 2030 Agenda for Sustainable Development. Globally, the negative effects of the Covid-19 pandemic create obstacles to achieving the UN Sustainable Development Goals. The world government should reduce the number of poor by at least half by 2030 (Sustainable Development Goal 1, Target 1.2), expand opportunities and promote social, economic and political inclusion of all segments of the population, regardless of their economic status (Sustainable Development Goal 10, Target 10.2), but the pandemic makes its adjustments. In regions such as South Asia and sub-Saharan Africa, instead of reducing poverty, it has risen to 1990 levels. The middle class has suffered the most in South Asia and the Asia-Pacific region. There is no doubt that the Covid-19 pandemic will provoke the deepest socio-economic crisis in 100 years. Representatives of the middle class in India, Brazil, South Africa, Thailand and Ukraine continue to record rising food and real estate prices, their purchasing power is declining, and central banks are forced to tighten monetary policy prematurely. In order for the middle class to stimulate economic growth, increase investment, maintain adequate consumption, use public and private services, national governments and the international community must respond quickly to the crises triggered by Covid-19 and take the necessary measures to eliminate them in order to ensure a decent standard of living above the poverty line.

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Migrants’ remittances and economic growth in Egypt: an empirical analysis from 1980 to 2017

Review of Economics and Political Science ◽

10.1108/reps-10-2018-0011 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Rasha Qutb

Keyword(s):

Economic Growth ◽

Granger Causality ◽

Recipient Country ◽

Growth Effect ◽

Annual Data ◽

Content Type ◽

Long Run ◽

Integration Test ◽

Migrant Remittances ◽

The Impact

Purpose Migrants’ remittances to Egypt have increased considerably in both size and importance over the past 40 years. This increase has made Egypt one of the top remittance recipients in the world and the leading recipient country in the Middle East. As migrant remittances are one of Egypt's main sources of foreign capital, this study aims to identify the impact of these remittances on economic growth. Design/methodology/approach The study collects annual data on migrant remittances sent to Egypt during the period 1980–2017. The study uses the Augmented Dickey–Fuller test and Johnsen's Co-integration test to establish long-run relationships between variables. Then, a vector error correction model (VECM) is used to combine long-run and short-run dynamics, and a Granger causality test is performed. Finally, diagnostic tests of the VECM are conducted. Findings Results reveal that migrants’ remittances to Egypt are countercyclical in the sense that they have a long-term negative impact on economic growth. These results are determined by the Granger causality between migrants' remittances, inflation rate and imports. Practical implications The study can help policymakers to develop appropriate policies to turn migrants' remittances into a reliable source of capital that could result in a stable economic growth. Originality/value Although various empirical studies have examined the growth effect of remittances, most of them are based on cross-country data. This study contributes to the field by attempting to close a gap in the literature by empirically analyzing the impact of remittances on a single country over a long period.

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