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The Impact of Remittances on Economic Growth in Ethiopia

Author

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  • Tassew Dufera Tolcha

    (Lecturer, Department of Economics, Hawassa University, Hawassa, Ethiopia.)

  • P.Nandeeswar Rao

    (Assistant Professor, Department of Economics, Hawassa University, Hawassa, Ethiopia.)

Abstract

Nowadays, remittance has risen in a significant way in developing countries. But different scholars in different countries differently characterize its impact on economic growth. Depending on this debate of remittance, two separate views or school of thoughts was created; optimist and pessimist views. The optimists agreed in that remittances have a positive effect on the remit receiving country through reducing poverty and stimulating the economic growth. However, according to the pessimists view, remittance shouldn’t encourage the economic growth, rather it retard the economy through increasing dependency on the foreign by remit receiving countries and making the extreme consumption. Given such important literature this study was undertaken to add on existing literature by assessing the impact of remittances on Ethiopian economic growth over the period 1981 – 2012. ARDL model is used for time series estimation. An empirical result from the study reveals that there is a short run significant impact of remittances on economic growth while it affect the economy negatively in the long run.

Suggested Citation

  • Tassew Dufera Tolcha & P.Nandeeswar Rao, 2016. "The Impact of Remittances on Economic Growth in Ethiopia," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 7(2), pages 01-15, May.
    • Handle: RePEc:aii:ijcmss:v:07:y:2016:i:2:p:01-15
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    References listed on IDEAS

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    2. Roseline Nyakerario Misati & Anne Kamau & Hared Nassir, 2019. "Do migrant remittances matter for financial development in Kenya?," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 5(1), pages 1-25, December.
    3. Debelo Bedada Yadeta & Fetene Bogale Hunegnaw, 2022. "Effect of International Remittance on Economic Growth: Empirical Evidence from Ethiopia," Journal of International Migration and Integration, Springer, vol. 23(2), pages 383-402, June.
    4. Mathew Ekundayo Rotimi & Mishelle Doorasamy & Udi Joshua & Grace Gift Rotimi & Confort Omolayo Rotimi & Gabriel Samuel & Gbenga Adeyemi & Ayodele Solomon Alemayo & Alfred Kimea, 2022. "ARDL Analysis of Remittance and Per Capita Growth Nexus in Oil Dependent Economy: The Nigeria’s Experience," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 15(3), pages 38-51, December.
    5. Soma Rani Sutradhar, 2020. "The impact of remittances on economic growth in Bangladesh, India, Pakistan and Sri Lanka," International Journal of Economic Policy Studies, Springer, vol. 14(1), pages 275-295, February.

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