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The Impact of Remittance Inflows on Economic Complexity: A Quantile CS-ARDL Analysis for LAC Countries

Author

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  • Olcay ÇOLAK

    (Uşak University)

  • Sevilay Ece GÜMÜŞ ÖZUYAR

    (Necmettin Erbakan University)

Abstract

This study investigates the impact of remittance inflows on economic complexity across 11 Latin American and Caribbean (LAC) countries from 1996 to 2023. While remittances are a major source of external financing, this research examines whether they trigger the 'Dutch Disease' or facilitate structural transformation. Utilizing panel quantile methodologies to account for cross-sectional dependence and structural heterogeneity, the findings reveal quantile-dependent relationship. Utilizing panel quantile methodologies to account for cross-sectional dependence and structural heterogeneity, the findings reveal a statistically constrained and localized relationship. In the lower and median quantiles, remittance inflows do not exert a statistically significant long-run effect on economic complexity. However, at higher quantiles of economic complexity, remittances demonstrate a statistically significant positive long-run impact under specific model specifications. This implies that remittances do not function as a generalized driver of structural transformation, but rather play a highly conditional role that supports economic sophistication only in economies that already possess relatively advanced structural capabilities and absorptive capacity. The study’s originality lies in its identification of a distributional heterogeneity, suggesting that the transformative power of remittances is contingent upon a nation's absorptive capacity. Policy recommendations focus on channeling these flows into productive investments to support industrial capabilities.

Suggested Citation

  • Olcay ÇOLAK & Sevilay Ece GÜMÜŞ ÖZUYAR, 2026. "The Impact of Remittance Inflows on Economic Complexity: A Quantile CS-ARDL Analysis for LAC Countries," Business and Economics Research Journal, Bursa Uludag University, Faculty of Economics and Administrative Sciences, vol. 17(4), pages 523-544, October.
    • Handle: RePEc:ris:buecrj:023909
    DOI: 10.20409/berj.2026.510
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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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