Effect Of Remittances Research Articles

Remittances, terrorism, and democracy

How do remittances affect domestic terrorism? Past work argues that remittances increase groups’ resources and increase terrorism. However, we argue that the effect of remittances depends on political institutions. Within democracies, remittances can help groups overcome barriers to legitimate politics and reduce terrorism's allure. Within autocracies, however, fewer legitimate political opportunities exist, and remittances may lead to more terrorism as it remains an alternative and available political outlet. We find that remittances are associated with less (more) domestic terrorism within democracies (autocracies) and use additional mechanism tests to demonstrate that the competitive aspects of democracy help explain these trends.

Impact of Internal Remittances on Labour Participation and Employment Choice in Pakistan

This study examines internal remittances’ effects on Pakistan’s labour market outcomes. The study utilises data from the Pakistan Social and Living Standard Measurement – Household Integrated Economic Survey (PSLM – HIES 2018-2019). The study uses Logit and Multinomial Logit models to estimate the effect of internal remittances on labour participation and employment choices. The study’s findings suggest that individuals from households receiving internal remittances are less likely to participate in the labour market than those from households that do not receive remittances. Moreover, internal remittances lower the likelihood to participate in the labour market. Amongst the labour participating, the individuals of remittance-receiving households are more inclined to participate in farming vis-à-vis non-receiving individuals. It is also observed that a rise in remittances results in a greater likelihood of farming activities. The study’s findings have important implications pertaining to understanding the entrepreneurial level and economic activities in remittance-receiving households.

Remittances, Financial Depth and Economic Growth of Malaysia

The objective of this study is to investigate the effects of remittances inflows to Malaysia's economy and does the financial sector development level have influence on remittances impact to economic growth of Malaysia. Time series technique has been adopted to explore long run effect of remittances, financial depth and growth in Malaysia using annual data for the period 1984-2013. The results showed that remittances and financial depth have positive and significant effect on growth in long run. Granger Causality tests are also used to explore the relationship between remittance-growth and financial development-growth. The findings revealed that there is an impact of remittances on economic growth of Malaysia via the influence of the country's financial depth.

Effect of Tourism and Remittance Income on Economic Growth in SAARC Countries

The paper examines the effect of remittance and tourism income on economic growth in SAARC countries. It is based on the exploratory and descriptive research design and is mainly guided by the positivist research philosophy. The secondary data are used for the analysis, collected from the various reports of the World Bank and economic surveys of respective countries. The unbalanced panel data ranges from a maximum of 23 to a minimum of 14; altogether, 169 observations are evaluated. Some statistical and econometric tools like descriptive statistics, correlation analysis, panel unit root testing, and panel ARDL model are utilized to observe the relation and impact of tourism and remittance income on the GDP growth of SAARC countries. There is a high degree of correlation between GDP and remittance income. There is a moderate degree of positive association ship between GDP and tourism income. Tourism and remittance income positively and significantly impact the economic growth of SAARC countries in the long run. One per cent increase in remittance and tourism income increased 0.277 and 0.518 per cent in GDP, respectively, in SAARC countries. The impact of tourism income is stronger than the impact of remittance income in promoting economic growth in SAARC countries. But in the short run, the significant impact of tourism and remittance income is not identified.

Financial Remittance and Growth in Nigeria: Does Financial Development Matter?

This study explores the complex relationship between financial remittances, financial development, and economic growth in Nigeria by investigating whether financial development serves as a mediator in the effect of remittances on Nigeria's economic performance. Thus, this present study focuses on the interactive effect of financial remittances and financial development on economic growth in Nigeria using secondary data for the periods of 1984 to 2022. The results of the Dynamic Ordinary Least Squares (DOLS) and Fully Modified Ordinary Least Squares (FMOLS) showed that, individually, remittances do not significantly increase economic growth in Nigeria, but when we considered the moderated effect of financial development, remittances become growth-enhancing in Nigeria. The findings reveal a positive and statistically significant interactive effect of remittances and financial development on economic growth, confirming the role of remittances as a source of external finance that stimulates domestic investment and consumption. Furthermore, the study provides compelling evidence supporting the mediating role of financial development in this relationship. A well-developed financial sector, characterized by depth, efficiency, and access, enhances the positive impact of remittances on economic growth. In light of these findings, the study underscores the importance of policies aimed at fostering financial inclusion, promoting financial literacy, and expanding access to formal financial services. These measures empower remittance recipients to make informed and productive financial decisions, thereby maximizing the developmental benefits of remittances. Keywords: Remittances; Growth; Financial Development; Nigeria; DOLS.

Remittances and the Size and Composition of Government Spending

Objective. We study the effect of remittances on the size and composition of public spending. Methodology. An optimization technique is used to develop a dynamic theoretical model and a simulation analysis. Results. It is demonstrated that remittances have a positive income effect on public goods, but a negative income effect and a price effect on social transfers, which explains why public goods increase, but social transfers can increase or fall due to changes in the remittances. Recommendations. The model makes recommendations for public policy design by characterizing the optimal level of public spending. Limitations. It is desirable to extend our analysis to consider electoral incentives and thus provide different explanations of how remittances might affect public spending. Originality. To the best of our knowledge, this is the first document that develops a theory to explain the effect of remittances on the size and composition of public spending. Conclusions. Remittances have a differentiated effect on public goods and social transfers depending on the income and price effects that affect the composition of public spending.

Do Remittances Stimulate Economic Growth In Nepal? Evidence From ARDL Approach

ABSTRACT: Remittances from migrant workers are the major sources of financial inflows into the Nepalese economy. The World Bank's data of 2021 suggests that Nepal is one of the top ten recipients of remittances in terms of its share of GDP. Even though remittances make up a significant portion of foreign capital flows, the macroeconomic impact of these transfers on economic growth has not been sufficiently studied. Therefore, the aim of our study is to investigate the impact of remittances on the Nepalese economy for the period 1990 -2021 using the autoregressive distributed lag (ARDL) model. The ARDL approach is applied to identify the long-term and short-term effects of worker remittances on the Nepalese economy. The model uses real GDP as a proxy for economic growth and uses workers' remittances as main explanatory variable along with gross fixed capital formation, trade openness, foreign aid, and human capital as the control variables. The findings of the bound test suggest that there is a long-run relationship between remittances and economic growth. Furthermore, it is also demonstrated that remittances, gross fixed capital formation and foreign aid have a positive effect on real GDP. While we found a negative effect of trade openness and human capital on real GDP in short run and long run dynamics. The positive influence of remittances appears to be very weak, as a significant portion of remittances to Nepal are used for private domestic consumption. Moreover, the negative contribution of imports to economic growth suggests that a larger portion of remittances is spent on daily consumption and consumer durable items such as television, refrigerator, washing machine, air conditioning, and so on. Based on the analysis of the results, Nepal needs to develop an integrated policy to motivate migrants in intensity of saving and investment on multiple productive sectors rather spending on basic consumption. In doing so, such practice helps in channelising the remittances into economic growth through the multiplier effect. The transaction cost of remitting money is another challenging issue in Nepal. Therefore, policy measures must be focused on minimising transaction cost of remittances through the formal and organised channels.

The Role of Remittances in Financing the Current Account Deficit: The Case of Serbia

Abstract Migrations of the resident population in Serbia, with the Western European countries as the main destination, have influenced remittances becoming an important source of income from abroad. Relevant economic literature, as well as the influential views expressed in the international financial institutions’ reports, indicate that remittances are a more stable type of inflow of funds from abroad to developing countries compared to other types of capital movements. In addition to the positive economic effects of remittances, they also play a significant role in the balance of payments deficit reduction. The subject of this research refers to the examination of the role of remittances in financing the current account deficit in Serbia. The research goal is to explore whether the importance of remittances as a factor in the balance of payments deficit reduction in Serbia increased in the period 2007-2021. The results of the research show that remittances have become an important factor in current account deficit reduction in Serbia during the observed period.

Growth Effect of Migrant Remittances and Human Capital: Panel Evidence from Sub-Saharan African Countries

Purpose: The aim of this study is to examine the growth effect of migrant remittances and human capital in sub-Saharan Africa (SSA) economies.
 
 Theoretical Framework: The study adopts the Cobb-Douglas production function of the AK model to examine the growth effect of migrant remittances and human capital in sub-Saharan Africa (SSA) economies.
 
 Design/Methodology: Data from 27 SSA countries for the period 2000-2020 was obtained from the World Development Indicator, a publication of the World Bank. The study variables include, real per capita income, migrant remittances, human capital, domestic investment, trade openness and inflation. The panel fully modified ordinary least square (PFMOLS) technique was deployed to analyse the study model.
 Findings: The study’s outcome showed that migrant remittances positively influence and cause growth while human capital has not contributed to growth in the SSA region.
 
 Research, Practical & Social Implication: From the study findings, it is recommended that regional government should encourage the continuous inflow of migrant remittances to their countries and make conscious efforts in developing the level of human capital in their country via constant training, reducing or eradicating the number of school drop-out at all levels (primary, secondary, and tertiary).
 
 Originality/Value: In this study, the issue of migrant remittances, human capital and growth is re-examined by (i) considering a panel of similar economies, (ii) estimating Cobb-Douglas production function for the effect of migrant remittances via technology and human capital, (iii) adopting a robust technique (PFMOLS) that relax the assumption of homogeneity among parameters across economies and the exogeneity of migrant remittances.

How do remittances impact child mortality and are there preconditions?

While recent research suggests that remittances affect child mortality, little is known about how remittances influence this outcome and what conditions may moderate its effectiveness. This article investigates whether and how remittances affect child mortality in developing countries. We examine the impact of remittances on the three leading causes of child mortality, explore potential channels through which this may occur and examine whether socioeconomic or political factors affect the remittances-mortality relationship. Using data for 122 developing countries over the period 2003–2018 and a dynamic panel estimator, with both internal instruments and a shift-share external instrument, we find that remittances reduce child mortality from diarrheal diseases. Our findings suggest that sanitation usage is a possible channel through which remittances affect diarrheal mortality. We also find that the mortality-reducing effect of remittances does not appear to be contingent on the level of governance or health infrastructure. However, it remains unclear whether the effect is influenced by other forms of health funding. These findings suggest that remittances serve an important role in improving child health, and the effectiveness of these inflows is not reliant on onerous preconditions being met. Thus, remittances may be important to public health dialogue, especially in developing countries where diarrheal diseases are prevalent.

Does the Income from Tourism and Remittances Really Matter for Economic Growth? Evidence from the Nepalese Economy

This study investigates the effects of tourism and remittances on Nepal's Gross Domestic Product (GDP). It is based on secondary information acquired from Nepal's several economic surveys and publications from the Nepal Rastra Bank. It spans 34 fiscal years, from 1987/88 through 2020/21. The study employs descriptive and exploratory research designs.Descriptive statistics, unit root testing, Augmented Dickey-Fuller test, ARDL bound testing approach, heteroscedasticity test, serial correlation test, and CUSUM and CUSUM squares test of stability analysis are some econometrics instruments utilized.The GDP, remittances, and income from tourism are found to be correlated over the long term. In the long run, remittances and tourism revenue increase Nepal's GDP, but there is no discernible effect in the short run. The GDP increased by 0.794 and 0.157 percent for every one percent increase in tourist and remittance income. Therefore, the impact of tourism income is more significant than the impact of remittance income on GDP. Therefore, policymakers can employ tourism to promote Nepal's long-term economic growth.

Does the cost of remitting matter? Evidence from low-income countries on the effect of remittances on income distribution

ABSTRACT Part C of the United Nation’s (UN) 10th Sustainable Development Goal to reduce inequality addresses the high transaction costs faced by migrants when sending money home. The target is to reduce transaction fees to a maximum of 3%. To test the strength of these targets in reducing income inequality, we conducted instrumental variable (IV) estimations on 32 low-income countries for the period 2008–2021. The results show that remittances – typically made by low-paid workers–help reduce income inequality in the home country and that high transaction fees probably reduce the average remitted amount, rather than discouraging migrants from sending money home. Both remitting behaviors contribute to widening the income gap. Based on our estimations, the ‘affordable level’ is up to 1.93%. Fees greater than this would result in fewer remittances given the budget constraints faced the remitters – often employed in unskilled jobs in high-income countries. Hence, our results do not support the SDG 10.c target of 3%, and suggest that the UN should thus revise the target and set fees to be no higher than 2%.

The Impact of Remittances on Children's Education in Jungkat Village, Mempawah Regency

The income of Indonesian workers sent to their families in their hometown will affect changes in the economic conditions of the families of Indonesian workers in terms of education. This study aims to determine the effect of remittances made by Indonesian workers who work abroad on the education of their family members in the area of origin. This study aimed to determine whether Indonesian workers who work abroad are aware of the importance of using remittances as the fee for their family education. As education is a basic need and benefits the improvement of the education of the nation's children. This research used qualitative research methods with data taken from Jungkat Village, Mempawah Regency. This study showed that most Indonesian workers in the village work to earn a living and provide appropriate education to their family members. In addition, remittances allow families in their hometowns to easily receive the salary given by Indonesian workers abroad. However, there are also disadvantages for those Indonesian workers who send remittances, as families and communities do not know each other that well.

The effects of remittances on household food nutrition security in the context of multiple shocks in Malawi

The effects of remittances on household food nutrition security in the context of multiple shocks in Malawi

The Influence of Inflation, Foreign Investment and Receipt of Remittances on the Rupiah Exchange Rate in 2014 – 2018

The purpose of this study was conducted to determine the effect of inflation, foreign investment, and remittances on the rupiah exchange rate in 2014 - 2018. This type of research is a quantitative approach where this data is of secondary data type in the form of time series. This data is taken from BPS and Bank Indonesia websites. This research method is multiple regression with the OLS model assisted by processing with the Eviews application. The results showed that inflation with the rupiah exchange rate was negatively related, where if inflation increased, the rupiah exchange rate weakened and vice versa, foreign investment did not have a significant effect on the exchange rate and remittances had a significant effect on the exchange rate.

UNVEILING THE CATALYSTS OF ECONOMIC DEVELOPMENTS: EXPLORING DYNAMIC LINK BETWEEN FOREIGN REMITTANCES AND KEY INDICATORS IN SOUTH ASIA

The purpose of the study was to investigate the relationship between foreign remittances and economic development, specifically examining their impact on GDP per capita growth, significance of workers' remittances in economic growth, influence of remittances on Gross Capital Formation Ratio, the effect of remittances on household final consumption expenditure, relationships between remittances and trade as the percentage of GDP, and the effects of remittances on population growth. The researcher selected six countries in South Asia as the sample for this study. The panel data was used to test the relationship between the observed variables, employing both random and fixed effect models to test study's hypotheses. Findings revealed a positive relationship between the growth of foreign remittances and indicators such as GDP per capita, the overall economic growth, gross capital creation, and household consumption spending. These results thus highlight the significant influence that the remittances have had on Pakistan's economic indices and underscore the importance of remittance flows for the growth and stability of the Pakistani economy.

An Analysis of Remittance and Private Consumption in Nepal

In recent decades, the increasing inflow of remittances and their benefits to originating countries have become an emerging issue in migration and development in the world economy. The government and household members of the country of origin have been taking the maximum possible advantages of remittances in various fields, and it is becoming a more stable source of external finance. However, around 80 percent of remittance received by households is used only for consumption purposes in Nepal. Despite the increasing importance of remittance in the Nepalese economy, the relationship between remittance and private consumption has not yet been adequately studied. Hence, the prime objective of this paper is to analyze the effects of remittance on private consumption expenditure in Nepal. The ARDL bounds testing model is employed in the study to identify the effects of remittance on private consumption in Nepal. The time series data for 20 years, 2001-2020, are collected from various government sources, such as the Ministry of Finance, Nepal Rastra Bank (NRB), and the National Statistics Office. This study finds a positive and significant relationship between remittances and private consumption in Nepal. The impact of other control variables like GDP is positive and significant for consumption. However, the consumer price index has a negative effect on consumption. The Nepal government and other concerned agencies should encourage sending remittances only from formal banking channels that could help with capital formation and thereby investment and job creation in Nepal. It also solves the liquidity crisis and foreign exchange constraints in the nation.

Impact of the greenfield-foreign direct investment on the economic growth of Afghanistan

Afghanistan is a least developed country; during the liberation, about three-fourths of the economy was ruined, and over the past two decades, the country has geared up a slight economic growth. The study's objective is to assess the impact of greenfield foreign direct investment on the economic growth of Afghanistan during the interval 2002-2021. The research also investigates the effect of remittances, foreign aid, and population. In this study, the stationarity of all variables is checked via the Augmented Dickey-Fuller test (ADF). The results were analysed with ARDL and ECM techniques. The results show that greenfield investment and remittances are statistically significant in the short and long run. Foreign aid is insignificant in the short and long run. The population is insignificant in the long run but significant in the short run. First, the government of Afghanistan improved its friendly investment policy to attract foreign investors. Second, the government of Afghanistan signed an agreement with neighbouring countries, especially developed countries, to send their skilled and educated labour so they will easily earn their livelihood and send remittances to their families. Third, the government of Afghanistan should avoid foreign aid that may affect its economy in the short term.

Effects of remittances on renewable energy consumption: Evidence from instrumental variable estimation with panel data

This study investigates the impact of remittances on renewable energy consumption (REC) using a panel of 25 top remittance-receiving countries for 1990–2018. We use a generalized two-stage least squares random effect model to estimate the impact of remittance on renewable energy use. Results showed that remittances and REC have a generally positive relationship among the studied nations. Governments may create a system to incentivize remittance-receiving households to adopt and utilize more carbon-neutral energy devices at a lower cost if they pay with remittances. This approach could lead to higher societal adoption and consumption of green energy.

Remittances, economic complexity, and new firms’ creation: empirical evidence from a large sample of countries

One of the most debated issues in migration economics regards the effects of remittances in receiving countries. In this paper, we test whether the economic complexity of a country is relevant for understanding the impact of remittances on new firms’ birth. We find evidence that the impact of real per capita remittances on new firms’ creation is inversely mediated by economic complexity. More (less) complex economies generate opportunities to found new firms which need high (low) funding. Since economic complexity is positively correlated with economic development, remittances are more likely to facilitate the establishment of new firms in less developed economies rather than in more advanced ones. We also examine the link between remittances and new firm creation for Africa, Asia, Europe, and Latin America and the Caribbean countries, finding very heterogeneous patterns. Hence, policy implications aiming at attracting remittances to create new firms should respond to the challenges posed by specific countries and be tailored to their peculiar needs. Countries of origin should build institutions and facilitate the creation of networks to bridge the diaspora abroad with their home country to increase awareness of new business opportunities. Policy initiatives could spur investment in the formal economy by making regulations less stringent, discouraging the use of remittances for consumption purposes, reducing informality, improving competition, reducing remittance transfer costs, and giving incentives to new firms created through remittances.