Are remittances good for economic growth? The role of political institutions

ABSTRACT

Within a sample of 109 developing countries for the period 1975–2014 and controlling for country and time-fixed effects, this article presents evidence that workers’ remittances are more effective in promoting growth in developing countries with strong democratic institutions. The evidence is robust to alternative samples and different measures of democratic institutions.

KEYWORDS:

• Democratic institutions
• workers’ remittances
• developing countries
• system-GMM

JEL CLASSIFICATION:

• F22
• P16

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

¹ I estimate all specifications in Tables 1 and 2 using OLS-fixed effects and find that in all cases the coefficient on the interaction is significantly positive at least at the 10% level. And the coefficient on linear remittances remains negative and often insignificant at conventional levels. I caution against these results because of the Nickell’s (1981) bias and endogeneity of the regressors.

Additional information

Funding

This research did not receive any specific grant from funding agencies in the public, commercial or not-for-profit sectors.