Nexus between remittance outflows and economic growth in GCC countries: the mediating role of financial development

Abstract

ABSTRACT An important but underestimated area in international economics is the study of the impacts of remittance outflows and financial development on the economic growth of the remitting countries. This study explores how remittance outflows and financial development can affect the economic growth of the Gulf Cooperation Council (GCC) region using panel data from 1999 to 2018. The outcome reveals that remittance outflows are negatively related to economic growth. While financial development is effective in stimulating economic growth and is significant, the moderating role of financial development is growth-enhancing in the GCC region. Our findings are robust and insensitive to different econometric techniques. To benefit from immigrants, this research suggests a stimulus policy that GCC countries should facilitate foreign workers to settle sustainably and participate in investment activities, and increase consumption in their host country.