To Mull Remittance and Misery Index of Selected Asian Countries: A Panel ARDL Approach (original) (raw)
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The purpose of the paper is to investigate the impacts of economic and non-economic factors on the remittance receiving of Bangladesh. The study focuses on quantitative analysis of unbalanced panel data of 8 countries on remittance receiving of Bangladesh for the period of 1981-2019 by employing fixed effects model and random effects model. The results show that crude oil price, domestic credit to private sector of host country, and global financial crisis of 2008-10 have significant positive impact on remittance receiving of Bangladesh. GDP per capita of home country has significant negative impact which is an evidence of altruistic motive of migrant workers to remit more money. The impact of terrorist attacks on September 11, 2001 is found significantly positive as it resulted into strict change in monetary regulation by spreading more money from informal channel to formal channel. The political unrest in Bangladesh during 2007-08 has insignificant positive impact what means the non-democratic and army backed 1/11 government did not help to grow the remittance receiving. Inflation rate of host country has insignificant positive impact and FDI to GDP of host country has insignificant negative impact. Contribution/Originality: This paper documents the altruistic motive of migrant workers to send more remittances. This is the first study which has investigated 1/11 government effect on remittance receiving of Bangladesh. This paper adds value to the remittance related literature views. The findings can help to modify polices to increase remittance receiving.
Impact of Remittance on Economic Progress: Evidence from Low-Income Asian Frontier Countries
Journal of the Knowledge Economy, 2022
This paper attempts to know the contribution of remittances to the economic progress of three low-income Asian frontier countries namely Bangladesh, Sri Lanka, and Vietnam. This study applies pooled ordinary least squares (OLS), fixed effect, and random effect models to know the aggregate impact of remittances on economic development using panel data from 1990 to 2019. Vector error correction model and granger causality have been used to know the country-specific impact. The regression results indicate a significantly negative impact of remittances on the economic progress of sample countries. In Bangladesh, remittances have neither short-run nor long-run association; while in Vietnam, there exits short-run association but no long-run association. In Sri Lanka, the short-run causality flows from remittances to GDP per capita and vice-versa. This study further observes excessive consumption and investment in unproductive sectors of transferred money result in a negative correlation with economic development. This study analyzes both the impact of remittances on economic development from an aggregate perspective and from a countryby-country perspective, unlike previous studies that only considered an aggregate perspective. Based on the findings and recommendations of this study, it is expected that policymakers will be able to use the remittances to accelerate economic growth in productive sectors.
An Empirical Investigation of the Impact of Foreign Remittances on Poverty in Developing Countries
Remittances sent to home countries by migrant workers became significant in amount. Such funds can have profound implications for economic development, human welfare and poverty reduction in a developing country context. This paper examines the impact of foreign remittances on poverty in selected developing countries. A set of time series data has been utilized to empirically check the relationship between remittances and poverty for a list of 44 developing countries worldwide. For the purpose of the study, the ‗Three Stage Least Squares‘ (TSLS) regression technique has been applied. A separate analysis for a group of countries among the list which recorded a remittances to GDP ratio of 2% or more has been performed. The study finds that remittances have a significant negative impact on poverty in a developing country.
Effectiveness of the international remittances on poverty: Evidence from cross-country analysis
DergiPark (Istanbul University), 2022
This paper aims to examine the impact of international remittances on poverty in a data-rich environment. International remittances are considered in the literature as one of the poverty alleviation programmes, since they improve the welfare of family members left behind and promote the economic conditions of the recipient countries. After a careful review of the relevant literature, various pooled ordinary least squares (Pooled OLS), dummy variable least squares (DVLS), and three-stage least squares (3SLS) models are constructed to reveal the determinants of poverty and the existence of bi-directional relationship between poverty and international remittances. The empirical results show that gross domestic product per capita, inequality in income distribution, and international remittances have a statistically significant impact on poverty. A 10% increase in international remittances reduced the poverty level of the portion of the population whose cost of living is less than $1.90 per person per day by 0.7% to 1.7%. This paper broadens the existing literature on the relationship between international remittances and poverty in a more comprehensive framework by using a broader data set and different panel data regression models.
International Remittances and Poverty: Blessing or Curse?
Ekonomický časopis
This paper aims to examine the effectiveness of international remittances on poverty. The equation explaining the determinants of poverty is analyzed using the fixed-effects regression model, and the equation examining the existence of a two-way relationship between poverty and international remittances is analyzed using the three-stage least squares model. The empirical findings reveal that there is a bi-directional relationship between poverty and international remittances. An increase in poverty levels triggers migration abroad, and remittances sent by immigrants to their country of origin reduce poverty. An increase in government spending and household income reduces poverty, while an increase in income inequality and inflation exacerbates poverty. Moreover, trade openness has a positive effect on international remittances, and official remittances become easier in financially developed economies as transaction costs decrease. By channeling international remittances, which are considered a stable source of finance, into the accumulation of physical and human capital, they contribute to economic development and increase their impact on poverty. This study contributes to the literature by using the most recent and comprehensive dataset and econometric methodology, and by differentiating the impact of international remittances on poverty by income group-specific effects as well as by region-specific effects.
The Altruistic Motive of Remittances: A Panel Data Analysis of Economies in Sub Saharan Africa
International Journal of Economics and Finance, 2012
Remittances have become an important source of foreign exchange earnings in many countries as migrants continue to send income to relatives at home. However, the main motives for sending remittances remain controversial. This paper examines the relative importance of the socio-political and economic determinants of remittance inflow using an unbalance panel data of 36 economies in the Sub Saharan African Region in an attempt to assess the altruistic motive of remittance inflow. The results using a random effect estimation technique show that altruism is important for remitting, as the per capita income differential between host and home country and the age dependency ratio are positive and statistically significant. The level of per capita income of the home country is also found to be negative and statistically significant which also supports the altruistic motive of remittances. The results further suggest that the development of the financial sector and the proportion of Catholics in the population will encourage remittance inflow. These results are robust to the different specifications and estimation methodology.
2011
In the discourse on remittances, it is generally argued that altruism as well as an efficient financial system would increase the flow of remittances to the recipient country. We empirically examine whether altruism is the force behind the transfer of remittances to Pakistan and does financial deepening affect the inflow of remittances? Furthermore, we analyze whether remittances are procyclical, countercyclical or acyclical. An annual data set spanning 1973-2008 is used to analyze the relationship between remittances, financial deepening and Gross Domestic Product (GDP) growth rate by using Bounds Test (Modified ARDL). Our findings negate the general notion that altruism is a driving force behind remittances. The analysis further indicates that remittances tend to increase as financial system gets deeper. Moreover, it is confirmed that remittances are procyclical and may be of little relief in events of downturns in the economy.
Poverty Effects of Remittances: a Comparative Analysis
Journal of International Development, 2014
This paper studies the impact of remittances on crosscountry poverty using a panel data set from 65 developing counties over a long period 1970-2008. This study differs from the existing literature on poverty impact of remittances by explicitly noting the importance of financial development in shaping the link. This analysis shows that the effect of remittances on poverty depends on the level of financial development of a remittances receiving economy. Those economies that have a low level of financial development seem to acquire an unfavourable effect of remittances while economies with comparatively developed financial systems do not suffer from the adverse effects of remittances. In sum, remittances accentuate not ameliorate poverty in countries with the low level of financial development.
We study the determinants of remittances to developing countries at different time horizons. Remittances to developing countries nowadays exceed official development assistance and constitute a significant fraction of the disposable income of many households in developing countries. Different hypotheses suggest that remittances are often sent to compensate for low incomes, which may impose a downward bias when estimating their effects on the economic development (e.g. growth, poverty and consumption) in recipient countries. Two popular hypotheses about the causes of remittances are the altruism and insurance hypothesis. Both hypotheses suggest that remittances are sent to compensate for short-run economic declines, but the altruism hypotheses also predict that remittances should diminish gradually over time as the economic development in the receiving countries proceeds and the need for outside assistance decreases. Hence, the altruism hypothesis predicts a negative correlation between the economic conditions in the receiving countries and remittances in the long-run and the short-run, while the insurance hypothesis only predicts a negative relationship in the shortrun. We can thus test which hypothesis that is best supported the data by studying the correlation between remittances and consumption in receiving countries at different time horizons. For this purpose we use a macroeconomic panel with consumption and remittances data from 50 low and middle income economies between 1980 and 2006. We estimate Keynesian consumption functions with GDP and remittances per capita as explanatory variables for the full panel and for different subpanels. The data is decomposed into different time horizons using a maximal overlap discrete wavelet transform. We are not aware of any study which uses similar econometric techniques to test different hypotheses about the underlying causes of remittances. Our evidence predominantly supports a negative long-run relationship, which favours the altruism over the insurance hypothesis.
A Study on Determinants and Economic Impacts of Remittances
2008
For over the past few years remittances have represented the largest source of foreign income in a number of developing economies. Even though scholars agree that diaspora is an important source for the economic, social and political development, the key empirical question is whether remittances encourage long-run economic growth. For the past several decades, remittances appear to be one of the stable and important sources of financial flow to Armenia. Armenia is a small country, having poor economic fundamentals, however, due to the country's very large diaspora, Armenia receives large remittance inflows. Despite of its limited geo-economic possibility, Armenia is among the 15 largest remittance recipient countries in the world. Thus, macroeconomic effects of remittance have become an important aspect in defining the development of the country. Even though there is a number of existing literatures on the impacts of the remittances on the household and the national ii economy, more research is needed to study the reasons behind remitting decision of Armenian migrants, and the economic impacts of the remittances. This paper intends to examine main determinants and motivations behind the Armenian migrants' decision to remit based on previous studies, as well as to estimate the impacts of remittance on the Armenian economy, by testing the hypothesis that the impact of remittances on growth is affected by the level of financial development and the quality of institutions in the home country. The results show that macroeconomic factors, such as home and host GDP per capita, exchange rates and interest rates have significant impacts on the Armenian remittance receiving trends. Also, among the motivations behind the migrants' remitting decision, self-interest motive dominates altruistic intentions. This can be explained by the close ties of the migrants with the families in the home country, as well as the tendency of short-term migrations over long-term ones in case of Armenia. Although the results of the estimation of impacts of remittances on the economic growth are negative, nevertheless, countries with well-established domestic institutions and financial stability are proved to be significant in enhancing remittance contribution to the economic growth.