Remittances, Governance and Economic Growth: Empirical Evidence from MENA Region

In this study we examine the effects of remittances and governance on economic growth in ten MENA countries. We choose these countries because they have relatively stable political situations. Using annual data from the World Bank over the period 2002-2017, we estimate panel autoregressive distributed lag (ARDL) models due to the existence of mixed levels of integration among series involved in this study. Control variables such as gross capital formation, consumption per capita and openness among others are integrated in these models. A governance composite is computed using the 6 governance indicators from the world bank. These indicators are used individually in different ARDL models with their interactions with the remittances to explore their impact on economic growth. The findings indicate a negative impact of the remittance on economic growth in the quasi-totality of the models. However, while governance composite shows a positive impact on economic growth, taking into consideration the dimensions of governance leads to conflicting results.