Remittances, Institutions and Economic Growth
AbstractThere is considerable debate regarding the relative contribution of international migrants' remittances to sustainable economic development. While the rates and levels of officially recorded remittances to developing countries has increased enormously over the last decade, academic and policy-oriented research has not come to a consensus over whether remittances contribute to longer-term growth by building human and financial capital or degrade long-run growth by creating labor substitution and 'Dutch disease' effects. This paper suggests that contradictory findings have emerged when looking at the remittances-growth link because previous studies have not correctly controlled for endogeneity. Using Dynamic Data Panel estimates we find that remittances exert a weakly positive impact on long-term macroeconomic growth. The paper also considers the proposition that the longer-term developmental impact of remittances is increased in the presence of sound economic policies and institutions.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2139.
Length: 29 pages
Date of creation: May 2006
Date of revision:
Publication status: published in: World Development, 2009, 37(1), 81-92
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Other versions of this item:
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-05-27 (All new papers)
- NEP-FDG-2006-05-27 (Financial Development & Growth)
- NEP-SOC-2006-05-27 (Social Norms & Social Capital)
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- Ralph Chami & Connel Fullenkamp & Samir Jahjah, 2005.
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- Dollar, David & Kraay, Aart, 2003. "Institutions, trade, and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 133-162, January.
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