IDEAS home Printed from https://ideas.repec.org/a/vrs/seejeb/v17y2022i1p79-94n3.html
   My bibliography  Save this article

Impact of Remittances on Economic Growth: Empirical Evidence from South-East European Countries

Author

Listed:
  • Bucevska Vesna

    (Full Professor, Ss. Cyril and Methodius University in Skopje, Faculty of Economics-Skopje, bul. Goce Delcev 9V, 1000 Skopje, Republic of North Macedonia)

Abstract

South-East European (SEE) countries are experiencing high emigration, resulting in a significant increase in remittance inflows, exceeding FDI flows. Today the most important challenge facing SEE countries is how to grow at a higher speed to achieve faster economic convergence with the EU. The objective of the paper is to empirically examine the relevance of remittances as a factor of economic growth, using quarterly balanced panel data set of six SEE countries: Albania, Bosnia and Herzegovina, Croatia, Montenegro, the Republic of North Macedonia, and Serbia (SEE6) over 2008q1-2020q2. Panel regression with the fixed-effects model is employed to account for potential cross-section heterogeneity. This study provides original econometric evidence that remittances have a significant positive impact on economic growth in our panel of SEE6. Those results will be useful both to scholars and policymakers in the process of the creation of policies that will direct remittances into investments in the economy.

Suggested Citation

  • Bucevska Vesna, 2022. "Impact of Remittances on Economic Growth: Empirical Evidence from South-East European Countries," South East European Journal of Economics and Business, Sciendo, vol. 17(1), pages 79-94, June.
    • Handle: RePEc:vrs:seejeb:v:17:y:2022:i:1:p:79-94:n:3
    DOI: 10.2478/jeb-2022-0006
    as

    Download full text from publisher

    File URL: https://doi.org/10.2478/jeb-2022-0006
    Download Restriction: no
    File URL: https://libkey.io/10.2478/jeb-2022-0006?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Chang, Roberto & Kaltani, Linda & Loayza, Norman V., 2009. "Openness can be good for growth: The role of policy complementarities," Journal of Development Economics, Elsevier, vol. 90(1), pages 33-49, September.
    2. Mohamed Saadi, 2020. "Remittance Inflows and Export Complexity: New Evidence from Developing and Emerging Countries," Journal of Development Studies, Taylor & Francis Journals, vol. 56(12), pages 2266-2292, December.
    3. Petreski Marjan & Petreski Blagica & Tumanoska Despina & Narazani Edlira & Kazazi Fatush & Ognjanov Galjina & Jankovic Irena & Mustafa Arben & Kochovska Tereza, 2017. "The Size and Effects of Emigration and Remittances in the Western Balkans. A Forecasting Based on a Delphi Process," Comparative Southeast European Studies, De Gruyter, vol. 65(4), pages 679-695, December.
    4. Batu, Michael, 2017. "International worker remittances and economic growth in a Real Business Cycle framework," Structural Change and Economic Dynamics, Elsevier, vol. 40(C), pages 81-91.
    5. Jude Eggoh & Chrysost Bangake & Gervasio Semedo, 2019. "Do remittances spur economic growth? Evidence from developing countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 28(4), pages 391-418, May.
    6. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
    7. Emmanuel K. K. Lartey, 2017. "Remittances and Current Account Dynamics," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 46(1), pages 37-52, February.
    8. Atish Ghosh & Steven Phillips, 1998. "Warning: Inflation May Be Harmful to Your Growth," IMF Staff Papers, Palgrave Macmillan, vol. 45(4), pages 672-710, December.
    9. Jorge Bermejo Carbonell & Richard A. Werner, 2018. "Does Foreign Direct Investment Generate Economic Growth? A New Empirical Approach Applied to Spain," Economic Geography, Taylor & Francis Journals, vol. 94(4), pages 425-456, August.
    10. Hein de Haas & Mathias Czaika & Marie‐Laurence Flahaux & Edo Mahendra & Katharina Natter & Simona Vezzoli & María Villares‐Varela, 2019. "International Migration: Trends, Determinants, and Policy Effects," Population and Development Review, The Population Council, Inc., vol. 45(4), pages 885-922, December.
    11. Ramey, Garey & Ramey, Valerie A, 1995. "Cross-Country Evidence on the Link between Volatility and Growth," American Economic Review, American Economic Association, vol. 85(5), pages 1138-1151, December.
    12. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    13. Esmeralda Jushi & Eglantina Hysa & Arjona Cela & Mirela Panait & Marian Catalin Voica, 2021. "Financing Growth through Remittances and Foreign Direct Investment: Evidences from Balkan Countries," JRFM, MDPI, vol. 14(3), pages 1-17, March.
    14. Ralph Chami & Connel Fullenkamp & Samir Jahjah, 2005. "Are Immigrant Remittance Flows a Source of Capital for Development?," IMF Staff Papers, Palgrave Macmillan, vol. 52(1), pages 55-81, April.
    15. Giuliano, Paola & Ruiz-Arranz, Marta, 2009. "Remittances, financial development, and growth," Journal of Development Economics, Elsevier, vol. 90(1), pages 144-152, September.
    16. J. Bradford DeLong & Lawrence H. Summers, 1992. "Equipment Investment and Economic Growth: How Strong Is the Nexus?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(2), pages 157-212.
    17. Satya Paul & Colm Kearney & Kabir Chowdhury, 1997. "Inflation and economic growth: a multi-country empirical analysis," Applied Economics, Taylor & Francis Journals, vol. 29(10), pages 1387-1401.
    18. Ali, Amjad & Ur Rehman, Hafeez, 2015. "Macroeconomic Instability and Its Impact on Gross Domestic Product: An Empirical Analysis of Pakistan," MPRA Paper 82496, University Library of Munich, Germany, revised 2015.
    19. Rao, B. Bhaskara & Hassan, Gazi Mainul, 2011. "A panel data analysis of the growth effects of remittances," Economic Modelling, Elsevier, vol. 28(1-2), pages 701-709, January.
    20. Yaya Keho, 2017. "The impact of trade openness on economic growth: The case of Cote d’Ivoire," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1332820-133, January.
    21. World Bank, 2020. "Western Balkans Regular Economic Report, No. 17, Spring 2020," World Bank Publications - Reports 33670, The World Bank Group.
    22. Viorica Chirila & Ciprian Chirila, 2017. "The Analysis of Romania’s External Migration and of the Causality between Remittances and Romania’s Economic Growth," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 19(46), pages 696-696, August.
    23. Arusha Cooray, 2012. "The Impact of Migrant Remittances on Economic Growth: Evidence from South Asia," Review of International Economics, Wiley Blackwell, vol. 20(5), pages 985-998, November.
    24. Kristina Matuzeviciute & Mindaugas Butkus, 2016. "Remittances, Development Level, and Long-Run Economic Growth," Economies, MDPI, vol. 4(4), pages 1-20, December.
    25. Alina Petronela Haller & Rodica Cristina Butnaru & Gina Ionela Butnaru, 2018. "International Migrant Remittances in the Context of Economic and Social Sustainable Development. A Comparative Study of Romania-Bulgaria," Sustainability, MDPI, vol. 10(4), pages 1-34, April.
    26. Michael T. Gapen & Mr. Ralph Chami & Mr. Peter J Montiel & Mr. Adolfo Barajas & Connel Fullenkamp, 2009. "Do Workers’ Remittances Promote Economic Growth?," IMF Working Papers 2009/153, International Monetary Fund.
    27. Katerina Lyroudi & John Papanastasiou & Athanasios Vamvakidis, 2004. "Foreign Direct Investment And Economic Growth In Transition Economies," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 2(1), pages 97-110.
    28. Catalina Amuedo-Dorantes, 2014. "The good and the bad in remittance flows," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-97, November.
    29. Emmanuel K.K. Lartey, 2016. "The Cyclicality Of Remittances In Sub-Saharan Africa," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 41(1), pages 1-18, March.
    30. repec:iza:izawol:journl:y:2014:p:97 is not listed on IDEAS
    31. Liliana Simionescu & Dalina Dumitrescu, 2017. "Migrants Remittances Influence on Fiscal Sustainability in Dependent Economies," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 19(46), pages 640-640, August.
    32. Robert Mundell, 1963. "Inflation and Real Interest," Journal of Political Economy, University of Chicago Press, vol. 71(3), pages 280-280.
    33. Trang Thi-Huyen Dinh & Duc Hong Vo & Anh The Vo & Thang Cong Nguyen, 2019. "Foreign Direct Investment and Economic Growth in the Short Run and Long Run: Empirical Evidence from Developing Countries," JRFM, MDPI, vol. 12(4), pages 1-11, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Taiwo, Kayode, 2020. "Do remittances spur economic growth in Africa?," MPRA Paper 111029, University Library of Munich, Germany, revised 2021.
    2. Md. Saiful Islam, 2022. "Do personal remittances influence economic growth in South Asia? A panel analysis," Review of Development Economics, Wiley Blackwell, vol. 26(1), pages 242-258, February.
    3. Mohammad Salahuddin & Jeff Gow, 2015. "The relationship between economic growth and remittances in the presence of cross-sectional dependence," Journal of Developing Areas, Tennessee State University, College of Business, vol. 49(1), pages 207-221, January-M.
    4. Abida Zouheir & Imen Mohamed Sghaier, 2014. "Remittances, Financial Development and Economic Growth: The Case of North African Countries," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 17(51), pages 137-170, March.
    5. Martin-Mayoral, Fernando & Proaño, Maria Belén, 2012. "Las remesas en América Latina, ¿amenaza u oportunidad? [Remittances in Latin America, a threat or an opportunity?]," MPRA Paper 43730, University Library of Munich, Germany.
    6. Jude Eggoh & Chrysost Bangake & Gervasio Semedo, 2019. "Do remittances spur economic growth? Evidence from developing countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 28(4), pages 391-418, May.
    7. Louis Bernard Tchekoumi & Patrick Danel Nya, 2023. "Remittances and economic growth: What lessons for the CEMAC zone?," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(1), pages 2191448-219, December.
    8. Manamba EPAPHRA, 2016. "Nonlinearities in Inflation and Growth Nexus: The Case of Tanzania," Journal of Economics and Political Economy, KSP Journals, vol. 3(3), pages 471-512, September.
    9. 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.
    10. Uwaoma G. Nwaogu & Michael J. Ryan, 2015. "FDI, Foreign Aid, Remittance and Economic Growth in Developing Countries," Review of Development Economics, Wiley Blackwell, vol. 19(1), pages 100-115, February.
    11. Gazi M. Hassan & Mark J. Holmes, 2016. "Do Remittances Facilitate a Sustainable Current Account?," The World Economy, Wiley Blackwell, vol. 39(11), pages 1834-1853, November.
    12. Akhand Akhtar Hossain, 2009. "Central Banking and Monetary Policy in the Asia-Pacific," Books, Edward Elgar Publishing, number 12777.
    13. Morvillier, Florian, 2020. "Do currency undervaluations affect the impact of inflation on growth?," Economic Modelling, Elsevier, vol. 84(C), pages 275-292.
    14. Rao, B. Bhaskara & Hassan, Gazi Mainul, 2011. "A panel data analysis of the growth effects of remittances," Economic Modelling, Elsevier, vol. 28(1-2), pages 701-709, January.
    15. Antonio Martuscelli & Michael Gasiorek, 2019. "Regional Integration And Poverty: A Review Of The Transmission Channels And The Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 33(2), pages 431-457, April.
    16. Ziesemer, Thomas H.W., 2012. "Worker remittances, migration, accumulation and growth in poor developing countries: Survey and analysis of direct and indirect effects," Economic Modelling, Elsevier, vol. 29(2), pages 103-118.
    17. Afi Etonam Adetou & Komlan Fiodendji, 2019. "Finance, Institutions, Remittances and Economic growth: New Evidence from a Dynamic Panel Threshold Analysis," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 9(2), pages 1-4.
    18. Ali, Amjad, 2022. "Financial Liberalization, Institutional Quality and Economic Growth Nexus: Panel Analysis of African Countries," MPRA Paper 116101, University Library of Munich, Germany.
    19. Francois, John Nana & Ahmad, Nazneen & Keinsley, Andrew & Nti-Addae, Akwasi, 2022. "Heterogeneity in the long-run remittance-output relationship: Theory and new evidence," Economic Modelling, Elsevier, vol. 110(C).
    20. Oluwasheyi S. Oladipo, 2020. "Migrant Workers' Remittances And Economic Growth: A Time Series Analysis," Journal of Developing Areas, Tennessee State University, College of Business, vol. 54(4), pages 75-88, October-D.

    More about this item

    Keywords

    Remittances; economic growth; panel data; South-East European countries;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • 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
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vrs:seejeb:v:17:y:2022:i:1:p:79-94:n:3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.sciendo.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.