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International remittances – the panacea for underdevelopment? A comparative panel data analysis of Sub-Saharan Africa and Latin America

  • Adenutsi, Deodat E.
  • Ahortor, Christian R.K.

In this paper we analyzed a dynamic cross-country panel dataset on 31 sampled developing countries involving 16 Latin America and the Caribbean, and 15 Sub-Sahara African countries within the framework of Blundell-Bond Generalized Method of Moments (GMM). Our results show that generally the impact of remittance inflows on overall development differ across regions. Specifically, the paper reveals that the positive role of international remittances in the development process of underdeveloped economies is more pronounced in Sub-Saharan Africa than in Latin America and the Caribbean sub-region where remittances actually retard socioeconomic development prospects. It would, therefore, be politically imprudent and economically suicidal, to over-depend on international remittances as the panacea for the underdevelopment of Sub-Saharan Africa, Latin America and the Caribbean. The contribution of this paper is unique because it has examined the long-run impact of international remittances on overall socioeconomic development which takes into account real per capita income, income disparity, and other socioeconomic equity factors incorporated into the construction of Human Development Index.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 29349.

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Date of creation: 2010
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Handle: RePEc:pra:mprapa:29349
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  1. Adams, Richard H. Jr., 2006. "Remittances and poverty in Ghana," Policy Research Working Paper Series 3838, The World Bank.
  2. Robert J. Barro, 1996. "Determinants of Economic Growth: A Cross-Country Empirical Study," NBER Working Papers 5698, National Bureau of Economic Research, Inc.
  3. Adams, Richard H., Jr., 1991. "The effects of international remittances on poverty, inequality, and development in rural Egypt:," Research reports 86, International Food Policy Research Institute (IFPRI).
  4. Adams, Richard Jr. & Page, John, 2005. "Do international migration and remittances reduce poverty in developing countries?," World Development, Elsevier, vol. 33(10), pages 1645-1669, October.
  5. Kristin J. Forbes, 2000. "A Reassessment of the Relationship between Inequality and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 869-887, September.
  6. Fischer, Stanley, 1993. "The role of macroeconomic factors in growth," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 485-512, December.
  7. Gustafsson, Bjorn & Makonnen, Negatu, 1993. "Poverty and Remittances in Lesotho," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 2(1), pages 49-73, May.
  8. Stark, Oded & Helmenstein, Christian & Prskawetz, Alexia, 1997. "A Brain Gain with a Brain Drain," Economics Series 45, Institute for Advanced Studies.
  9. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
  10. Stark, Oded & Levhari, David, 1982. "On Migration and Risk in LDCs," Economic Development and Cultural Change, University of Chicago Press, vol. 31(1), pages 191-96, October.
  11. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
  12. Adams, Richard H. Jr., 2004. "Remittances and poverty in Guatemala," Policy Research Working Paper Series 3418, The World Bank.
  13. Russell, S.S. & Jacobsen, K. & Stanley, W.D., 1990. "International migration and development in Sub-Saharan Africa," World Bank - Discussion Papers 101, World Bank.
  14. Edgard R. Rodriguez & Susan Horton, 1995. "International Return Migration and Remittances in the Philippines," Working Papers horton-95-01, University of Toronto, Department of Economics.
  15. Bichaka Fayissa & Christian Nsiah, 2008. "The Impact of Remittances on Economic Growth and Development in Africa," Working Papers 200802, Middle Tennessee State University, Department of Economics and Finance.
  16. Steve Bond, 2002. "Dynamic panel data models: a guide to microdata methods and practice," CeMMAP working papers CWP09/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  17. World Bank & International Monetary Fund, 2008. "Global Monitoring Report 2008 : MDGs and the Environment, Agenda for Inclusive and Sustainable Development," World Bank Publications, The World Bank, number 6518, March.
  18. Lipton, Michael, 1980. "Migration from rural areas of poor countries: The impact on rural productivity and income distribution," World Development, Elsevier, vol. 8(1), pages 1-24, January.
  19. repec:ebl:ecbull:v:15:y:2008:i:1:p:1-11 is not listed on IDEAS
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