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Remittances or technological diffusion: Which is more important for generating economic growth in developing countries?

This study examines the impact that technological diffusion and international migrants� remittances have on the economic development of developing countries. The hypothesis that skilled workers, living and working overseas, can effectively channel technological knowledge back to their home country, contributing to that country�s economic growth, is tested utilising data on the stock of high skilled workers from 50 developing countries working in industrialised countries over the last two decades. Results obtained lend strong support to this hypothesis. In addition, the effect that remittances from workers in developed countries, which are used for investment purposes in developing countries, have on the rate of growth of those developing economies is also investigated. Empirical evidence indicates that the remittances channel exerts a significant, positive impact on growth. More interestingly, the contribution of such investment-oriented remittances to driving sustainable economic development appears to be of relatively greater importance that of technological diffusion.

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File URL: http://www.uq.edu.au/economics/mrg/1807.pdf
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Paper provided by School of Economics, University of Queensland, Australia in its series MRG Discussion Paper Series with number 1807.

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Handle: RePEc:qld:uqmrg6:18
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  1. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October.
  2. David T. Coe & Elhanan Helpman & Alexander Hoffmaister, 1995. "North-South R&D Spillovers," NBER Working Papers 5048, National Bureau of Economic Research, Inc.
  3. Samir Jahjah & Ralph Chami & Connel Fullenkamp, 2003. "Are Immigrant Remittance Flows a Source of Capital for Development," IMF Working Papers 03/189, International Monetary Fund.
  4. Alejandra Cox Edwards & Manuelita Ureta, 2003. "International Migration, Remittances, and Schooling: Evidence from El Salvador," NBER Working Papers 9766, National Bureau of Economic Research, Inc.
  5. Richard R. Nelson & Edmond S. Phelps, 1965. "Investment in Humans, Technological Diffusion and Economic Growth," Cowles Foundation Discussion Papers 189, Cowles Foundation for Research in Economics, Yale University.
  6. Park, Jungsoo, 2004. "International student flows and R&D spillovers," Economics Letters, Elsevier, vol. 82(3), pages 315-320, March.
  7. David T. Coe & Elhanan Helpman, 1993. "International R&D Spillovers," NBER Working Papers 4444, National Bureau of Economic Research, Inc.
  8. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
  9. Catrinescu, Natalia & Leon-Ledesma, Miguel & Piracha, Matloob & Quillin, Bryce, 2009. "Remittances, Institutions, and Economic Growth," World Development, Elsevier, vol. 37(1), pages 81-92, January.
  10. Engelbrecht, Hans-Jurgen, 1997. "International R&D spillovers, human capital and productivity in OECD economies: An empirical investigation," European Economic Review, Elsevier, vol. 41(8), pages 1479-1488, August.
  11. Edwards, Alejandra Cox & Ureta, Manuelita, 2003. "International migration, remittances, and schooling: evidence from El Salvador," Journal of Development Economics, Elsevier, vol. 72(2), pages 429-461, December.
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