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Remittances, Economic Freedom, and Economic Growth in North African Countries

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  • Nahed Zghidi
  • Zouheir Abid

Abstract

This contribution investigates the causal interactions between foreign direct investment (FDI), economic freedom and economic growth in a panel of 4 countries of North Africa (Tunisia, Morocco, Algeria and Egypt) from 1980 to 2012. Using System Generalized Method of Moment (GMM) panel data analysis, we find strong evidence of a positive link between remittances and economic growth. We also find evidence that economic freedom appear to be working as a complement to remittances and, moreover, that the effect of remittances is more pronounced in the presence of the economic freedom variable. Thus, to the extent that remittances have become a major source of external development finance, policies promoting greater freedom of economic activities gain significantly from the presence of remittances.

Suggested Citation

  • Nahed Zghidi & Zouheir Abid, 2015. "Remittances, Economic Freedom, and Economic Growth in North African Countries," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 18(58), pages 139-162, December.
    • Handle: RePEc:rej:journl:v:18:y:2015:i:58:p:139-162
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    More about this item

    Keywords

    Economic freedom index; remittances; economic growth; Panel data analysis.;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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