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Growth effects of remittances in developing countries: A growth accounting approach

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  • Garcia-Fuentes, Pablo A.
  • Kennedy, P. Lynn
  • Ferreira, Gustavo F.C.

Abstract

This paper examines the growth effects of remittances using a panel of 103 countries over the period 1990–2019. It uses growth accounting methods and addresses the endogeneity of remittances by introducing external instruments based on economic indicators of the remittance sending-countries. It finds a robust remittance positive effect on growth in remittance-receiving countries. For the average country, an increase of one percentage point in remittances as share of GDP (from 4.16% to 5.46%) increases growth by 0.16%. Additionally, estimations based on the models in Chami et al. (2005), Barajas et al. (2009), and Senbeta (2013) show that remittances promote growth.

Suggested Citation

  • Garcia-Fuentes, Pablo A. & Kennedy, P. Lynn & Ferreira, Gustavo F.C., 2025. "Growth effects of remittances in developing countries: A growth accounting approach," Emerging Markets Review, Elsevier, vol. 67(C).
    • Handle: RePEc:eee:ememar:v:67:y:2025:i:c:s1566014125000524
    DOI: 10.1016/j.ememar.2025.101303
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    Keywords

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    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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