Workers' remittances are a major source of external finance in many former socialist countries. While previous studies showed that remittances have a positive impact on economic development, this study focuses on the determinants of remittances. Therefore, dynamic panel-data estimation techniques are applied. Major findings are: Remittances per capita and remittances in percent of GDP are driven by similar factors. In general, remittances are highly persistent and increase with the domestic unemployment rate. A higher GDP per capita as well as a higher degree of international integration of the sending countries' real sector leads to a decrease of remittances. In addition, there seems to evidence that remittances operate as a substitute for a well performing domestic banking sector. Institutional development seems to have no significant influence on the size of remittances. However, remittances per capita increase in times of war.
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Paper provided by Institute of Economic Research, Hitotsubashi University in its series Discussion Paper Series with number
a466.
Find related papers by JEL classification: F22 - International Economics - - International Factor Movements and International Business - - - International Migration F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
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