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The Impact Of Capital and Remittance Flows on Economic Performance in MENA Countries

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  • Magda Kandil

    (International Monetary Fund, The Western Hemisphere Department, Washington D.C.)

  • Ida A. Mirzaie

    (Ohio State University , Department of Economics)

Abstract

Using data for a sample of developing countries, we analyze the effects of external flows, namely migrants’ remittances and FDI flows, on real output growth, price inflation, and components of aggregate demand. The historical evidence indicates unstable patterns of FDI inflows to a sample of nine MENA countries. In contrast, remittances flows appear to be more stable over time in recipient countries. Except in Jordan, real GDP growth does not vary significantly with FDI inflows. Tunisia provides the only significant evidence of an increase in price inflation in response to FDI, which is coupled with a significant increase in private investment. FDI flows stimulate a higher increase in imports in Egypt. Remittances inflows appear, in general, a more important determinant of macroeconomic performance. Remittances inflows stimulate real output growth in Jordan and decrease price inflation in Egypt and Tunisia. The increase in growth in Jordan is coupled with an increase in private consumption, private investment, real exports and imports with respect to remittances inflows. Moreover, remittances increase export growth in Tunisia.

Suggested Citation

  • Magda Kandil & Ida A. Mirzaie, 2008. "The Impact Of Capital and Remittance Flows on Economic Performance in MENA Countries," Working Papers 440, Economic Research Forum, revised 09 Jan 2008.
    • Handle: RePEc:erg:wpaper:440
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    References listed on IDEAS

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    Cited by:

    1. Ramesh Chandra Paudel & Tara Prasad Bhusal, 2021. "Role of Workers Remittances in Export Performance of Nepal: Gravity Modelling Approach," NRB Economic Review, Nepal Rastra Bank, Economic Research Department, vol. 33(1-2), pages 1-13, October.
    2. Kouni, Mohamed, 2016. "Remittances And Growth In Tunisia: A Daynamic Panel Analysis From A Sectoral Database," MPRA Paper 75478, University Library of Munich, Germany.
    3. Mohammad Reza Farzanegan & Sherif Maher Hassan, 2020. "How does the flow of remittances affect the trade balance of the Middle East and North Africa?," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 23(2), pages 248-266, July.
    4. Wasseem MIchel Mina, 2010. "Institutional Reforms Debate and FDI Flows to MENA Region: Does One “Best” Fit All?," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1034, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    5. Wasseem MIchel Mina, 2010. "Institutional Reforms Debate and FDI Flows to MENA Region: Does One “Best” Fit All?," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1034, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    6. Rohan Byanjankar & Mira Sakha, 2021. "Role of Remittances on Rural Poverty in Nepal-Evidence from Cross-Section Data," NRB Economic Review, Nepal Rastra Bank, Economic Research Department, vol. 33(1-2), pages 45-72, October.

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