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Workers' Remittances in Yemen: Macroeconomic Determinants and Impact on Economic Growth

Author

Listed:
  • Essa A. Alhannom

    (Faculty of Administrative Sciences, Ibb University (Yemen))

  • Ghaleb S. Mushabeb

    (Faculty of Administrative Sciences, Ibb University (Yemen))

Abstract

This study aims to examine the determinants of workers' remittances and their impact on economic growth in Yemen. Autoregressive Distributed Lag (ARDL) bounds test to co-integration and error correction model (ECM) were applied on data covering the period from 1990 to 2014. According to the model of remittances determinants, workers' remittances in Yemen respond to the macroeconomic conditions of both the home and host countries. It is found that, in the long-run, migrant stock and income level at the host countries are positively and strongly influence remittances level, with a feeble impact of domestic inflation rates. The effect of the home country's income seems to be positive but insignificant in explaining the behaviour of remittances level. The model of economic growth suggests that, in the long run, the impact of workers' remittances appears to be positive and moderate with positive and stronger influences observed for financial development and official development assistance. Accordingly, it is recommended that a lesser weight should be given to remittances in the strategic planning process, taking into consideration the increasing potentials of the conditions in the neighbouring host countries to be changed. In addition, using remittances as a means of economic growth can be enhanced by encouraging migrants to direct their savings towards productive investment activities, and via formal channels.

Suggested Citation

  • Essa A. Alhannom & Ghaleb S. Mushabeb, 2021. "Workers' Remittances in Yemen: Macroeconomic Determinants and Impact on Economic Growth," Management & Economics Research Journal, Faculty of Economics, Commercial and Management Sciences, Ziane Achour University of Djelfa, vol. 3(2), pages 41-62, September.
    • Handle: RePEc:alv:journl:v:3:y:2021:i:2:p:41-62
    DOI: 10.48100/merj.2021.157
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    More about this item

    Keywords

    Remittances; Economic Growth; Time Series Analysis;
    All these keywords.

    JEL classification:

    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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