Remittance and Macroeconomic Performance in Top Migrating Countries

Abstract

Globalization opens up economies and encourages the free movement of persons and factors of production. Diaspora investors and workers earn income in the process and make remittances to the migrating countries. We examine the impact of the remittance inflow on the macroeconomic performance of top emigrating countries, which comprise nine emerging and two advanced economies. We conduct group and individual country analyses with distinct econometric models (Feasible Quasi Generalized Least Squares and Dynamic Common Correlated Effects) using data between 1987 and 2021. The results reveal positive impact of remittance inflows on nominal GDP and nominal GDP per capita and on real GDP and real GDP per capita, although evidence on the latter is weaker. In all, the emigrating countries can benefit from diaspora remittance in terms of improved productivity and macroeconomic performance. We therefore recommend better systems to facilitate remittance receipt and policies to channel such flows more into investment activities.