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Determinants of international remittance inflow in Asia-Pacific middle-income countries

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  • Yoshino, Naoyuki
  • Taghizadeh-Hesary, Farhad
  • Otsuka, Miyu

Abstract

The international remittances by immigrants to their home countries is one of the key sources of funding development in middle-income countries, especially in migrant-sending countries. This study assesses the determinants of international remittances using panel data from 22 Asia-Pacific middle-income countries, most of which are well-known migrant-sending countries, using the generalized method of moments (GMM) method. The results show that the gap in the per capita GDP growth rate between origin and destination countries, gross enrollment ratio of secondary education, and trade openness are positively associated with remittance inflow. On the other hand, net foreign direct investment (FDI) inflows are negatively correlated with remittance inflows. The results of this study can be interpreted as a paradigm shift for acquiring foreign capital in middle-income countries, from remittances in earlier stages of development to more FDI inflows when the country has the pre-requisites for absorbing foreign capital. The remittance inflows should be highly important, especially in the early stage of economic development, as additional incomes, or investment sources for those who live in middle-income countries.

Suggested Citation

  • Yoshino, Naoyuki & Taghizadeh-Hesary, Farhad & Otsuka, Miyu, 2020. "Determinants of international remittance inflow in Asia-Pacific middle-income countries," Economic Analysis and Policy, Elsevier, vol. 68(C), pages 29-43.
    • Handle: RePEc:eee:ecanpo:v:68:y:2020:i:c:p:29-43
    DOI: 10.1016/j.eap.2020.08.003
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    2. Hayot Berk Saydaliev & Lee Chin, 2023. "The necessity of social infrastructure for enhancing educational attainment: evidence from high remittance recipient LMICs," Economic Change and Restructuring, Springer, vol. 56(3), pages 1823-1847, June.
    3. Bruno Emmanuel Ongo Nkoa & Jacques Simon Song & Blaise Ondoua Beyene & Georges Ngnouwal Eloundou, 2023. "Does social media drive remittances in Africa?," African Development Review, African Development Bank, vol. 35(4), pages 429-443, December.
    4. Roland-Holst, David & Karymshakov, Kamalbek & Sulaimanova, Burulcha & Sultakeev, Kadyrbek, 2022. "ICT, Online Search Behavior, and Remittances: Evidence from the Kyrgyz Republic," ADBI Working Papers 1348, Asian Development Bank Institute.
    5. Jahan Abdul Raheem & Gazi M. Hassan & Mark J. Holmes, 2021. "The Impact of Remittances on Monetary Transmission Mechanisms during the Pre and Post-Conflict Eras in Sri Lanka," Working Papers in Economics 21/10, University of Waikato.
    6. P. Jijin & Alok Kumar Mishra & M. Nithin, 2022. "Macroeconomic determinants of remittances to India," Economic Change and Restructuring, Springer, vol. 55(2), pages 1229-1248, May.

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    More about this item

    Keywords

    Remittance; Middle-income trap; Poverty; Developing Asia-Pacific; Generalized method of moments (GMM);
    All these keywords.

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • F30 - International Economics - - International Finance - - - General

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