Abstract
The objectives of this research are diverse. First, determine the impact of workers’ remittances on Jordan’s economic growth during the period. The second goal in the second and third models is to determine the role of remittance in economic growth if we allow the interaction between workers’ remittances and human capital and physical capital, according to the theory of endogenous growth. For this purpose, time series analysis (cointegration tests and vector error correction model) is used. Corresponding it is found that all the series representing the variables are stationary at the first difference. The results also show that there are two cointegration vectors relating the variables. Therefore, the model was estimated using vector error correction model, which showed a long-term relationship between economic growth and explanatory variables. The estimate according to the first model showed that there is a significant positive effect for each of the workers' remittances, the variables of trade openness, financial policy, and the development of the financial system. while the physical and human capital variables have significance negative impact on growth. In the second and third model, it agreed with the endogenous growth theory, that if workers 'remittances are directed towards supporting physical and human capital, the impact of workers' remittances on economic growth will increase.
Highlights
The inflow of workers' remittances is getting the attention of many economists and development experts because of its increasing size and because of its increasing influence on building and expanding the regional and local economies of many developing countries
The current study deals with the effect of workers remittances on economic growth according to the national accounts theory and the endogenous growth theory in simulations of the Romer model (1990) and based on Borenszteina et al (1998) and Makki (2004) who relied on the endogenous growth theory, Borenszteina et al (1998) By estimating the effect of foreign direct investment on growth, while the Makki (2004) study added the trade variable to the Borenszteina et al [17]
As for the second model, the effect of the interaction between human capital and workers' remittances will be measured to find out the effect of this interaction on the effectiveness of workers ’remittances in promoting growth, according to endogenous growth theory, if the world’s remittances, directed towards spending on education and health will increase the absorptive capacity of human capital And deepening its role, and if directed towards investment, as in the third model, it will lead to a deepening of the role of physical capital and the spread of technology, which leads to an increase in the effectiveness of the impact on economic growth
Summary
The inflow of workers' remittances is getting the attention of many economists and development experts because of its increasing size and because of its increasing influence on building and expanding the regional and local economies of many developing countries. The total volume of official remittances to developing countries recorded in 2012 was 406 billion US dollars. This is three times more than official development assistance [24]. The volume of workers' remittances may exceed the declared amount due to unofficial channels. The increasing interest in this source is due to the fact that it is relatively more stable than other flows and is less volatile than foreign direct investment and external debt, and this is one of the reasons why workers' remittances flows to developing countries have received a greater focus in recent times, outweighing other financial flows. Policy makers and some economists agree that remittances are vital to the economic activities of recipient countries because they can lead to
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
