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Remittances and Economic Growth in Africa, Asia, and Latin American-Caribbean Countries: A Panel Unit Root and Panel Cointegration Analysis

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  • Bichaka Fayissa
  • Christian Nsiah

Abstract

This study estimates the macroeconomic impact of remittances and some control variables such as openness of the economy, capital/labor ratio, and economic freedom on the economic growth of African, Asian, and Latin American-Caribbean countries using newly developed panel unit-root tests, cointegration tests, and Panel Fully Modified OLS (PFMOLS). We use annual panel data from 1985- 2007for 64 countries consisting of 29 from Africa, 14 from Asia, and 21 from Latin America and the Caribbean region, respectively. We find that remittances, openness of the economy, and capital labor ratio have positive and significant effect on economic growth for all regions as a group and in each of the three in study. While the economic freedom index also has a positive and significant effect on growth in Africa and Latin America, however, its effect on the economic growth of Asia is mixed.

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Bibliographic Info

Paper provided by Middle Tennessee State University, Department of Economics and Finance in its series Working Papers with number 201103.

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Date of creation: Jun 2011
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Handle: RePEc:mts:wpaper:201103

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Web page: http://www.mtsu.edu/~berc/working/Economics_Working_Papers.html
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Keywords: Workers’ Remittances; Economic Growth; Unit-Root tests; Error Correction Model; PFMOLS; Panel Data; Africa; Asia; Latin America/Caribbean;

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  1. Pasaran, M.H. & Im, K.S. & Shin, Y., 1995. "Testing for Unit Roots in Heterogeneous Panels," Cambridge Working Papers in Economics 9526, Faculty of Economics, University of Cambridge.
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Cited by:
  1. Bichaka Fayissa & Christian Nsiah, 2012. "Financial Development and Remittances in Africa and the Americas: A Panel Unit-Root Tests and Panel Cointegration Analysis," Working Papers 201201, Middle Tennessee State University, Department of Economics and Finance.
  2. 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.

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