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The Impact Of Remittances On Economic Growth: Evidence From The 10 Most Remittance-Receiving For The Mena Countries

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  • WAFA ISSA

    (Faculty of Economics and Management of Sousse, University of Sousse, Sousse, Tunisia)

  • NAJEH BOUCHOUCHA

    (Faculty of Economics and Management of Sousse, University of Sousse, Sousse, Tunisia)

Abstract

This paper investigates the impact of remittances on economic growth for the ten MENA countries for the MENA region over a period from 1980 to 2021. Our contribution consists in decomposing the effect of remittances on economic growth into a direct effect and an indirect effect which are transmitted through the domestic investment channel and human capital channel. To do so, our econometric approach is based on dynamic panel data (GMM diff and GMM sys) in order to overcome endogeneity and inverse causality bias. Two main results can be identified: First, the results show that remittances negatively affect economic growth. Second, we show that the interaction terms between remittances and human capital (Rem∗enrol) and remittances and domestic investment (Rem∗inv) are positive and statistically significant in the dynamic panel approach. These results show that the effectiveness of migrant remittances in terms of economic growth depends heavily on improving human capital and orienting remittances to the most productive investments for MENA countries. The policy implications of our study are that governments of the most remittance-receiving countries in the MENA region must give great importance to improving domestic investment and the level of human capital in order to enhance remittances and promoting economic growth.

Suggested Citation

  • Wafa Issa & Najeh Bouchoucha, 2025. "The Impact Of Remittances On Economic Growth: Evidence From The 10 Most Remittance-Receiving For The Mena Countries," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 25(01n02), pages 1-24, July.
    • Handle: RePEc:wsi:gejxxx:v:25:y:2025:i:01n02:n:s2194565924500076
    DOI: 10.1142/S2194565924500076
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    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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