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Do Workers’ Remittances Promote Economic Growth?

Author

Listed:
  • Michael T. Gapen
  • Mr. Ralph Chami
  • Mr. Peter J Montiel
  • Mr. Adolfo Barajas
  • Connel Fullenkamp
Abstract
Over the past decades, workers' remittances have grown to become one of the largest sources of financial flows to developing countries, often dwarfing other widely-studied sources such as private capital and official aid flows. While it is undeniable that remittances have poverty-alleviating and consumption-smoothing effects on recipient households, a key empirical question is whether they also serve to promote long-run economic growth. This study tackles this question and addresses the main shortcomings of previous empirical work, focusing on the appropriate measurement, and incorporating an instrument that is both correlated with remittances and would only be expected to affect growth through its effect on remittances. The results show that, at best, workers' remittances have no impact on economic growth.

Suggested Citation

  • Michael T. Gapen & Mr. Ralph Chami & Mr. Peter J Montiel & Mr. Adolfo Barajas & Connel Fullenkamp, 2009. "Do Workers’ Remittances Promote Economic Growth?," IMF Working Papers 2009/153, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2009/153
    as

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    References listed on IDEAS

    as
    1. Raghuram G. Rajan & Arvind Subramanian, 2005. "What Undermines Aid's Impact on Growth?," NBER Working Papers 11657, National Bureau of Economic Research, Inc.
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    3. Giuliano, Paola & Ruiz-Arranz, Marta, 2009. "Remittances, financial development, and growth," Journal of Development Economics, Elsevier, vol. 90(1), pages 144-152, September.
    4. Abdih, Yasser & Chami, Ralph & Dagher, Jihad & Montiel, Peter, 2012. "Remittances and Institutions: Are Remittances a Curse?," World Development, Elsevier, vol. 40(4), pages 657-666.
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    6. Emmanuel K. K. Lartey & Federico S. Mandelman & Pablo A. Acosta, 2012. "Remittances, Exchange Rate Regimes and the Dutch Disease: A Panel Data Analysis," Review of International Economics, Wiley Blackwell, vol. 20(2), pages 377-395, May.
    7. Ms. Dalia S Hakura & Mr. Ralph Chami & Mr. Peter J Montiel, 2009. "Remittances: An Automatic Output Stabilizer?," IMF Working Papers 2009/091, International Monetary Fund.
    8. Michael Gapen & Thomas Cosimano & Ralph Chami, 2006. "Optimal Fiscal and Monetary Policy in the Presence of Remittances," Computing in Economics and Finance 2006 34, Society for Computational Economics.
    9. Acosta, Pablo A. & Lartey, Emmanuel K.K. & Mandelman, Federico S., 2009. "Remittances and the Dutch disease," Journal of International Economics, Elsevier, vol. 79(1), pages 102-116, September.
    10. Michael T. Gapen & Mr. Thomas F. Cosimano & Mr. Ralph Chami, 2006. "Beware of Emigrants Bearing Gifts: Optimal Fiscal and Monetary Policy in the Presence of Remittances," IMF Working Papers 2006/061, International Monetary Fund.
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    More about this item

    Keywords

    WP; remittance; remittance inflow; GDP; worker remittance variable; remittance flow;
    All these keywords.

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