Abstract
The objective of this study is to measure the impact of the workers' remittances on economic growth in Jordan during the period 1979-2015 by enhancing human 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 showed that there is a positive effect of statistical significance for each of the remittances of workers and foreign loans, and a positive effect that is not statistically significant for both foreign direct investment and foreign aid. The study concluded with several recommendations that we summarize regarding the importance of workers' remittances as an external source of financing, characterized by its relative stability, low costs and not being directly linked to any requirements, which makes it one of the most important external sources of financing in addition to a role in supporting the absorptive capacity of human capital and thus supporting economic growth and deepening the role of capital (capital deepening) and raise its productivity. On the other hand, the need to better direct the sources of external flows towards projects that support the absorptive capacity (knowledge, skills and experiences) of the workforce, by raising the proportion of foreign aid and foreign loans directed towards spending on education, training and skills acquisition, which enhances their role in the short and long term in economic growth as well as Towards capital projects, which may enhance the role of workers' remittances.
Highlights
Worker remittances are part of the income that migrants earn abroad and send to their families
1) Jordan's dependence on external sources of financing increased during the study period, which indicates that there are imbalances inherent in the structure of this economy on the one hand, and on the other hand evidence that this funding was not directed in a way that supports the real economic capabilities of the state necessary to reduce this dependence on both loans and aid External, and to enhance the flow of foreign investment on the other hand
4) The results of the Error Correction Model showed that the error correction factor is negative and has statistical significance, which indicates that economic growth in Jordan is affected by the explanatory variables used in the model in the long term
Summary
Worker remittances are part of the income that migrants earn abroad and send to their families. Its importance in developing countries has increased in the past few decades, as it currently constitutes one of the main sources of income in many countries. Due to the increase in these amounts in recent years, remittances of migrant workers have become increasingly important to developing countries. According to the World Bank's Summary Report (2019), annual remittances to lowmiddle income countries in 2018 totaled 529 billion dollars. On the level of the main countries receiving remittances, India was 79 billion dollars, China with 67 billion dollars, followed by Mexico with 36 billion dollars, the Philippines 34 billion dollars, and Egypt with 29 billion dollars.
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