The impact of remittances on human development in developing countries: an empirical evidence from cross-sectionally dependent heterogeneous panel data with structural breaks

This paper applies second generation panel unit root, panel cointegration and panel vector error-correction Granger causality tests that allow for country specific heterogeneity, cross-country dependence and multiple structural breaks in a panel of 100 developing countries and shows that in the short-run, there is evidence of (i) a bidirectional causal relationship between economic growth and human development; (ii) a unidirectional causal relationship from remittances to human development and (iii) a bidirectional causal relationship between economic growth and remittances. Our results further suggest that in the long-run, both economic growth and remittances jointly Granger-cause human development and that it takes more than fourteen years for human development to converge to its long-run equilibrium in response to changes in economic growth and remittances. there is evidence of (i) a bidirectional causal relationship between economic growth and human development; (ii) a unidirectional causal relationship from remittances to human development and (iii) a bidirectional causal relationship between economic growth and remittances. Our results further suggest that in the long-run, both economic growth and remittances jointly Granger-cause human development and that it takes more than fourteen years for human development to converge to its long-run equilibrium in response to changes in economic growth and remittances.