Nexus between remittance outflows and economic growth in GCC countries: the mediating role of financial development

ABSTRACT

An important but underestimated area in international economics is the study of the impacts of remittance outflows and financial development on the economic growth of the remitting countries. This study explores how remittance outflows and financial development can affect the economic growth of the Gulf Cooperation Council (GCC) region using panel data from 1999 to 2018. The outcome reveals that remittance outflows are negatively related to economic growth. While financial development is effective in stimulating economic growth and is significant, the moderating role of financial development is growth-enhancing in the GCC region. Our findings are robust and insensitive to different econometric techniques. To benefit from immigrants, this research suggests a stimulus policy that GCC countries should facilitate foreign workers to settle sustainably and participate in investment activities, and increase consumption in their host country.

KEYWORDS:

• Remittance outflow
• economic growth
• financial development
• GCC countries

JEL CLASSIFICATION:

• C3
• F24
• F43

Acknowledgment

The authors are thankful for the research support unit of The authors are thankful for the deanship of scientific research at the King Saud University represented by the research center at the College of Business Administration (CBA) for supporting this research. The authors also thank the Deanship of Scientific Research and RSSU at King Saud University for their technical support.

Disclosure statement

No potential conflict of interest was reported by the author(s).