Remittances and Economic Growth: Larger Impacts in Smaller Countries?

Abstract

This paper examines the impact of remittances on economic growth in Small Island Developing States (SIDS). Results from variants of an empirical model suggest that while, on average, there is at best no association between remittances and growth in developing countries, there is a positive association between these variables in SIDS. This finding holds for SIDS in sub-Saharan Africa and the Pacific but not for those in Latin America and the Caribbean. Relationships between remittances, economic volatility, and household labour supply are offered as reasons for these findings.