IDEAS home Printed from https://ideas.repec.org/a/tpr/restat/v95y2013i4p1166-1182.html
   My bibliography  Save this article

Remittances Deteriorate Governance

Author

Listed:
  • Faisal Z. Ahmed

    (Oxford University)

Abstract

I use a natural experiment of oil-price-driven remittance flows to poor, non-oil-producing Muslim countries to demonstrate that remittances deteriorate the quality of governance, especially in countries with weak democratic institutions. The results indicate that a 1 standard deviation increase in remittances raises corruption by 1.5 index points (on a 6-point scale), which is equivalent to a [dollar]600 decrease in per capita GDP. Concomitantly, remittances may enable governments to reduce their delivery of public services (for example, health care, school enrollment). The results suggest that political institutions may mediate the potentially beneficial socioeconomic effects of remittance inflows. © 2013 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Faisal Z. Ahmed, 2013. "Remittances Deteriorate Governance," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1166-1182, October.
  • Handle: RePEc:tpr:restat:v:95:y:2013:i:4:p:1166-1182
    as

    Download full text from publisher

    File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/REST_a_00336
    File Function: link to full text PDF
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ching-I Huang, 2013. "Intra-household effects on demand for telephone service: Empirical evidence," Quantitative Marketing and Economics (QME), Springer, vol. 11(2), pages 231-261, June.
    2. David J. Zimmerman, 2003. "Peer Effects in Academic Outcomes: Evidence from a Natural Experiment," The Review of Economics and Statistics, MIT Press, pages 9-23.
    3. Roland G. Fryer, Jr. & Paul Torelli, 2005. "An Empirical Analysis of 'Acting White'," NBER Working Papers 11334, National Bureau of Economic Research, Inc.
    4. Joseph G. Altonji & Todd E. Elder & Christopher R. Taber, 2005. "Selection on Observed and Unobserved Variables: Assessing the Effectiveness of Catholic Schools," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 151-184, February.
    5. Federico Ciliberto & Elie Tamer, 2009. "Market Structure and Multiple Equilibria in Airline Markets," Econometrica, Econometric Society, vol. 77(6), pages 1791-1828, November.
    6. Scott E. Carrell & Bruce I. Sacerdote & James E. West, 2011. "From Natural Variation to Optimal Policy? The Lucas Critique Meets Peer Effects," NBER Working Papers 16865, National Bureau of Economic Research, Inc.
    7. Bramoullé, Yann & Saint-Paul, Gilles, 2010. "Research cycles," Journal of Economic Theory, Elsevier, pages 1890-1920.
    8. Krauth, Brian V., 2007. "Peer and Selection Effects on Youth Smoking in California," Journal of Business & Economic Statistics, American Statistical Association, vol. 25, pages 288-298, July.
    9. Scott E. Carrell & Richard L. Fullerton & James E. West, 2009. "Does Your Cohort Matter? Measuring Peer Effects in College Achievement," Journal of Labor Economics, University of Chicago Press, vol. 27(3), pages 439-464, July.
    10. Krauth, Brian V., 2006. "Simulation-based estimation of peer effects," Journal of Econometrics, Elsevier, pages 243-271.
    11. Patrick Bajari & Han Hong & Stephen Ryan, 2004. "Identification and Estimation of Discrete Games of Complete Information," NBER Technical Working Papers 0301, National Bureau of Economic Research, Inc.
    12. Laura M. Argys & Daniel I. Rees, 2008. "Searching for Peer Group Effects: A Test of the Contagion Hypothesis," The Review of Economics and Statistics, MIT Press, pages 442-458.
    13. Bramoullé, Yann & Djebbari, Habiba & Fortin, Bernard, 2009. "Identification of peer effects through social networks," Journal of Econometrics, Elsevier, vol. 150(1), pages 41-55, May.
    14. Dean R. Hyslop, 1999. "State Dependence, Serial Correlation and Heterogeneity in Intertemporal Labor Force Participation of Married Women," Econometrica, Econometric Society, vol. 67(6), pages 1255-1294, November.
    15. Giacomo De Giorgi & Michele Pellizzari & Silvia Redaelli, 2010. "Identification of Social Interactions through Partially Overlapping Peer Groups," American Economic Journal: Applied Economics, American Economic Association, vol. 2(2), pages 241-275, April.
    16. Halliday, Timothy J. & Kwak, Sally, 2009. "Weight gain in adolescents and their peers," Economics & Human Biology, Elsevier, pages 181-190.
    17. Scafidi, Benjamin & Sjoquist, David L. & Stinebrickner, Todd R., 2007. "Race, poverty, and teacher mobility," Economics of Education Review, Elsevier, pages 145-159.
    18. Stinebrickner, Ralph & Stinebrickner, Todd R., 2006. "What can be learned about peer effects using college roommates? Evidence from new survey data and students from disadvantaged backgrounds," Journal of Public Economics, Elsevier, pages 1435-1454.
    19. Halliday, Timothy J. & Kwak, Sally, 2009. "Weight gain in adolescents and their peers," Economics & Human Biology, Elsevier, pages 181-190.
    20. Elie Tamer, 2003. "Incomplete Simultaneous Discrete Response Model with Multiple Equilibria," Review of Economic Studies, Oxford University Press, vol. 70(1), pages 147-165.
    21. Bresnahan, Timothy F. & Reiss, Peter C., 1991. "Empirical models of discrete games," Journal of Econometrics, Elsevier, vol. 48(1-2), pages 57-81.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Collier,Paul & Kirchberger,Martina & Söderbom,Måns, 2015. "The cost of road infrastructure in low and middle income countries," Policy Research Working Paper Series 7408, The World Bank.
    2. repec:eee:pubeco:v:155:y:2017:i:c:p:122-137 is not listed on IDEAS
    3. Minh Tran, Ngoc Thi & Cameron, Michael P. & Poot, Jacques, 2017. "International Migration and Institutional Quality in the Home Country: It Matters Where You Go and How Long You Stay!," IZA Discussion Papers 10945, Institute for the Study of Labor (IZA).
    4. Heindl, Peter & Kanschik, Philipp, 2016. "Ecological sufficiency, individual liberties, and distributive justice: Implications for policy making," Ecological Economics, Elsevier, pages 42-50.
    5. repec:eee:socmed:v:181:y:2017:i:c:p:74-82 is not listed on IDEAS
    6. Williams, Kevin, 2017. "Do remittances improve political institutions? Evidence from Sub-Saharan Africa," Economic Modelling, Elsevier, vol. 61(C), pages 65-75.

    More about this item

    Keywords

    remittance flows; governance;

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tpr:restat:v:95:y:2013:i:4:p:1166-1182. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kristin Waites). General contact details of provider: http://mitpress.mit.edu/journals/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.