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Do Workers' Remittances Promote Economic Growth?

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Author Info

  • Michael T. Gapen
  • Ralph Chami
  • Peter Montiel
  • Adolfo Barajas
  • Connel Fullenkamp

Abstract

Over the past decades, workers'' remittances have grown to become one of the largest sources of financial flows to developing countries, often dwarfing other widely-studied sources such as private capital and official aid flows. While it is undeniable that remittances have poverty-alleviating and consumption-smoothing effects on recipient households, a key empirical question is whether they also serve to promote long-run economic growth. This study tackles this question and addresses the main shortcomings of previous empirical work, focusing on the appropriate measurement, and incorporating an instrument that is both correlated with remittances and would only be expected to affect growth through its effect on remittances. The results show that, at best, workers'' remittances have no impact on economic growth.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 09/153.

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Length: 22
Date of creation: 01 Jul 2009
Date of revision:
Handle: RePEc:imf:imfwpa:09/153

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Related research

Keywords: Economic growth; Poverty; Welfare; Capital accumulation; Capital flows; Developing countries; Labor markets; Migration; Poverty reduction; Private capital flows; Transfers of foreigners income; Workers remittances; remittances; remittance; workers ? remittances; remittance flows; remittance inflows; gdp growth; migrant; gdp per capita; effects of remittance; determinants of remittances; real gdp; growth rate; remittance receipts; effects of remittances; impact of remittances; worker remittances; remitter; effect of remittances; trade-to-gdp ratio; remittance receipt; worker remittance; total factor productivity; remittances data; growth accounting; growth rates; capital formation; access to remittance; remittances inflows; gdp growth rate; effect of remittances on growth; flow of remittances; migrant remittances; impact of remittances on labor supply; recipients of remittances; remittance transfer; immigrant remittance; remittance transfers; impact of remittances on growth; remitters; cost of remittance; amount of remittances; bilateral remittance; contribution of remittances;

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References

References listed on IDEAS
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  1. Emmanuel K.K. Lartey & Federico S. Mandelman & Pablo A. Acosta, 2008. "Remittances, exchange rate regimes, and the Dutch disease: a panel data analysis," Working Paper 2008-12, Federal Reserve Bank of Atlanta.
  2. 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.
  3. Michael Gapen & Thomas Cosimano & Ralph Chami, 2006. "Optimal Fiscal and Monetary Policy in the Presence of Remittances," Computing in Economics and Finance 2006 34, Society for Computational Economics.
  4. Marta Ruiz-Arranz & Paola Giuliano, 2005. "Remittances, Financial Development, and Growth," IMF Working Papers 05/234, International Monetary Fund.
  5. Pablo A. Acosta & Emmanuel K.K. Lartey & Federico S. Mandelman, 2007. "Remittances and the Dutch disease," Working Paper 2007-08, Federal Reserve Bank of Atlanta.
  6. Michael T. Gapen & Thomas F. Cosimano & Ralph Chami, 2006. "Beware of Emigrants Bearing Gifts," IMF Working Papers 06/61, International Monetary Fund.
  7. Raghuram G. Rajan & Arvind Subramanian, 2005. "What Undermines Aid's Impact on Growth?," NBER Working Papers 11657, National Bureau of Economic Research, Inc.
  8. Jihad Dagher & Ralph Chami & Peter Montiel & Yasser Abdih, 2008. "Remittances and Institutions," IMF Working Papers 08/29, International Monetary Fund.
  9. Dalia Hakura & Ralph Chami & Peter Montiel, 2009. "Remittances," IMF Working Papers 09/91, International Monetary Fund.
Full references (including those not matched with items on IDEAS)

Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Do remittances help growth back home?
    by Economic Logician in Economic Logic on 2009-11-11 15:19:00
  2. Pengar till fattiga länder
    by nonicoclolasos in Nonicoclolasos on 2009-12-27 13:39:51
  3. Almost 80 percent of the growth in remittances to developing countries over the past 20 years is an illusion
    by ? in Development Impact on 2014-05-19 14:27:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Yasser Abdih & Ralph Chami & Christian Ebeke & Adolfo Barajas, 2012. "Remittances Channel and Fiscal Impact in the Middle East, North Africa, and Central Asia," IMF Working Papers 12/104, International Monetary Fund.
  2. Rao, B. Bhaskara & Hassan, Gazi Mainul, 2011. "A panel data analysis of the growth effects of remittances," Economic Modelling, Elsevier, vol. 28(1), pages 701-709.
  3. Yaw Nyarko and Kwabena Gyimah-Brempong, 2011. "Social Safety Nets: The Role of Education, Remittances and Migration," EUI-RSCAS Working Papers 26, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
  4. Nyamongo, Esman Morekwa & Misati, Roseline N. & Kipyegon, Leonard & Ndirangu, Lydia, 2012. "Remittances, financial development and economic growth in Africa," Journal of Economics and Business, Elsevier, vol. 64(3), pages 240-260.
  5. Imai, Katsushi S. & Gaiha, Raghav & Ali, Abdilahi & Kaicker, Nidhi, 2014. "Remittances, growth and poverty: New evidence from Asian countries," Journal of Policy Modeling, Elsevier, vol. 36(3), pages 524-538.
  6. Ibrahim Sirkeci & Jeffrey H. Cohen & Dilip Ratha, 2012. "Migration and Remittances during the Global Financial Crisis and Beyond," World Bank Publications, The World Bank, number 13092, October.
  7. Rahila Munir & Maqbool H. Sial & Ghulam Sarwar & Samina Shaheen, 2011. "Effect of Workers Remittances on Private Savings Behavior in Pakistan," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 1(3), pages 95-103, September.
  8. Gazi M. Hassan & Mark J. Holmes, 2013. "Remittances and the real effective exchange rate," Applied Economics, Taylor & Francis Journals, vol. 45(35), pages 4959-4970, December.
  9. Raza, Syed Ali & Sabir, Muhammad Sarwar & Mehboob, Farhan, 2011. "Capital inflows and economic growth in Pakistan," MPRA Paper 36790, University Library of Munich, Germany.
  10. Ralph Chami & Yasser Abdih & Amine Mati & Michael T. Gapen, 2009. "Fiscal Sustainability in Remittance-Dependent Economies," IMF Working Papers 09/190, International Monetary Fund.
  11. Miguel Ramirez, 2012. "Do Financial and Institutional Variables Enhance the Impact of Remittances on Economic Growth in Latin America and the Caribbean? A Panel Cointegration Analysis," Working Papers 1202, Trinity College, Department of Economics.
  12. Ratha, Dilip & Mohapatra, Sanket & Scheja, Elina, 2011. "Impact of migration on economic and social development : a review of evidence and emerging issues," Policy Research Working Paper Series 5558, The World Bank.
  13. Mohammad Irfan, 2011. "Remittances and Poverty Linkages in Pakistan: Evidence and Some Suggestions for Further Analysis," PIDE-Working Papers 2011:78, Pakistan Institute of Development Economics.
  14. James Dzansi, 2013. "Do remittance inflows promote manufacturing growth?," The Annals of Regional Science, Springer, vol. 51(1), pages 89-111, August.
  15. Hassan, Gazi, 2010. "Remittances and Poverty: Panel Evidence from High Remittance Economies," MPRA Paper 26445, University Library of Munich, Germany.
  16. Oloufade, Djoulassi K. & Pongou, Roland, 2012. "Dual Citizenship Institution: A Pareto Improvement?," MPRA Paper 40705, University Library of Munich, Germany, revised Aug 2012.
  17. 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.

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