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Do Foreign Remittances Promote Democracy? A Dynamic Panel Study of Developing Countries

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  • ISLAM, MD. Rubel
  • LEE, Kang-Kook

Abstract

The article examines the political aspect of remittances that receives very little attention in the current academic studies. By analyzing panel data from 156 countries with the system GMM, the study finds that remittances promote democracy in developing countries. Time trends analysis shows that remittances support democratic progress more substantially in recent periods since the surge of remittances after the 1990s. The study also finds that remittances accelerate the development of democracy in countries with favorable socioeconomic conditions and higher absorptive capacity. Finally, supporting the modernization hypothesis, the study provides evidence that remittances develop democracy by boosting economic development and human capital.

Suggested Citation

  • ISLAM, MD. Rubel & LEE, Kang-Kook, 2023. "Do Foreign Remittances Promote Democracy? A Dynamic Panel Study of Developing Countries," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 64(1), pages 59-85, June.
    • Handle: RePEc:hit:hitjec:v:64:y:2023:i:1:p:59-85
    DOI: 10.15057/hje.2023004
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    More about this item

    Keywords

    foreign remittances; democracy; modernization; developing countries;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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