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Remittances or technological diffusion: Which is more important for generating economic growth in developing countries?

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This study examines the impact that technological diffusion and international migrants� remittances have on the economic development of developing countries. The hypothesis that skilled workers, living and working overseas, can effectively channel technological knowledge back to their home country, contributing to that country�s economic growth, is tested utilising data on the stock of high skilled workers from 50 developing countries working in industrialised countries over the last two decades. Results obtained lend strong support to this hypothesis. In addition, the effect that remittances from workers in developed countries, which are used for investment purposes in developing countries, have on the rate of growth of those developing economies is also investigated. Empirical evidence indicates that the remittances channel exerts a significant, positive impact on growth. More interestingly, the contribution of such investment-oriented remittances to driving sustainable economic development appears to be of relatively greater importance that of technological diffusion.

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Paper provided by School of Economics, University of Queensland, Australia in its series MRG Discussion Paper Series with number 1807.

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Handle: RePEc:qld:uqmrg6:18

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  1. Samir Jahjah & Ralph Chami & Connel Fullenkamp, 2003. "Are Immigrant Remittance Flows a Source of Capital for Development," IMF Working Papers 03/189, International Monetary Fund.
  2. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October.
  3. Catrinescu, Natalia & Leon-Ledesma, Miguel & Piracha, Matloob & Quillin, Bryce, 2006. "Remittances, Institutions and Economic Growth," IZA Discussion Papers 2139, Institute for the Study of Labor (IZA).
  4. Coe, David T & Helpman, Elhanan, 1993. "International R&D Spillovers," CEPR Discussion Papers 840, C.E.P.R. Discussion Papers.
  5. Coe, David T & Helpman, Elhanan & Hoffmaister, Alexander W, 1997. "North-South R&D Spillovers," Economic Journal, Royal Economic Society, vol. 107(440), pages 134-49, January.
  6. Alejandra Cox Edwards & Manuelita Ureta, 2003. "International Migration, Remittances, and Schooling: Evidence from El Salvador," NBER Working Papers 9766, National Bureau of Economic Research, Inc.
  7. Park, Jungsoo, 2004. "International student flows and R&D spillovers," Economics Letters, Elsevier, vol. 82(3), pages 315-320, March.
  8. Eduardo Borensztein & Jose De Gregorio & Jong-Wha Lee, 1995. "How Does Foreign Direct Investment Affect Economic Growth?," NBER Working Papers 5057, National Bureau of Economic Research, Inc.
  9. Edwards, Alejandra Cox & Ureta, Manuelita, 2003. "International migration, remittances, and schooling: evidence from El Salvador," Journal of Development Economics, Elsevier, vol. 72(2), pages 429-461, December.
  10. Engelbrecht, Hans-Jurgen, 1997. "International R&D spillovers, human capital and productivity in OECD economies: An empirical investigation," European Economic Review, Elsevier, vol. 41(8), pages 1479-1488, August.
  11. Richard R. Nelson & Edmond S. Phelps, 1965. "Investment in Humans, Technological Diffusion and Economic Growth," Cowles Foundation Discussion Papers 189, Cowles Foundation for Research in Economics, Yale University.
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Cited by:
  1. Thanh Le, . "North - South R&D Spillovers and Student Flows," MRG Discussion Paper Series 3309, School of Economics, University of Queensland, Australia.

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