Follow the Money: Remittance Responses to FDI Inflows

Coon, Michael; Neumann, Rebecca

doi:10.1515/jgd-2017-0023

Cited by 12 publications

(10 citation statements)

References 44 publications

(25 reference statements)

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“…The results indicate unidirectional causality. In the other hand, Coon and Neumann (2015) studied the relationship between remittances and FDI in 118 developing countries from 1980 to 2010 and found that an increase of 10% in FDI inflows corresponds to a 3.6% increase in remittances. Such results suggest that migrant remittances and FDI are complementary.…”

Section: Empirical Literature Reviewmentioning

confidence: 99%

Impact of foreign direct investment, remittances and official development assistance on economic growth: panel data approach

Zardoub

Sboui

2021

PRR

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PurposeGlobalization occupies a central research activity and remains an increasingly controversial phenomenon in economics. This phenomenon corresponds to a subject that can be criticized through its impact on national economies. On the other hand, the world economy is evolving in a liberalized environment in which foreign direct investment plays a fundamental role in the economic development of each country. The advent of financial flows – FDI, remittances and official development assistance – can be a key factor in the development of the economy. The subject of this article is to analyses the effect of financial flows on economic growth in developing countries. Empirically, different approaches have been employed. As part of this work, an attempt was made to use a panel data approach. The results indicate ambiguous effects and confirm the results of previous work.Design/methodology/approachThe authors seek to study the effect of foreign direct investment, remittances and official development assistance (ODA) and some control variables i.e. domestic credit, life expectancy, gross fixed capital formation (GFCF), inflation and three institutional factors on economic growth in developing countries by adopting the panel data methodology. Then, the authors will discuss empirical tests to assess the econometric relevance of the model specification before presenting the analysis of the results and their interpretations that lead to economic policy implications. As part of this work, the authors have rolled panel data for developing countries at an annual frequency during the period from 1990 to 2016. In a first stage of empirical analysis, the authors will carry out a technical study of the heterogeneity test of the individual fixed effects of the countries. This kind of analysis makes it possible to identify the problems retained in the specific choice of econometric modeling to be undertaken in the specificities of the panel data.FindingsThe empirical results validate the hypotheses put forward and indicate the evidence of an ambiguous effect of financial flows on economic growth. The empirical findings from this analysis suggest the use of economic-type solutions to resolve some of the shortcomings encountered in terms of unexpected effects. Governments in these countries should improve the business environment by establishing a framework that further encourages domestic and foreign investment.Originality/valueIn this article, the authors adopt the panel data to study the links between financial flows and economic growth. The authors considered four groups of countries by income.

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Section: Empirical Literature Reviewmentioning

confidence: 99%

Impact of foreign direct investment, remittances and official development assistance on economic growth: panel data approach

Zardoub

Sboui

2021

PRR

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“…The existence of social ties between the migrant and the household dispels the notion of pure investment motive in remittances (Mahapatro, 2017;Coon & Neumann, 2015;Azizi, 2017). A striking feature of diaspora investment is the commonality of stimulants with other external capital flows; foreign direct and official development assistance.…”

Section: Foreign Remittances and Private Sector Investmentmentioning

confidence: 99%

Foreign Remittances, Banking Sector Development and Private Sector Investment

Githaiga¹

2020

JBEES

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Purpose-This study seeks to investigate the impact of foreign remittances on private sector investment and the moderating role of banking sector development in Sub-Saharan African Countries. Research design, data, and methodology-The study has used a sample of 15 Sub-Saharan African countries and data for the years 1986 -2017. Data was obtained from the World Bank Development Indicator (WDI) Database. Panel data diagnostic tests were conducted to ascertain the suitability of the data for regression analysis. The data was analyzed through descriptive and inferential statistics, while the hypothesis was tested through hierarchical regression analysis. Results-The finding of this study indicates that foreign remittances and banking sector development had a significant and positive effect on private investment in Sub-Saharan Africa. Besides, the banking sector development significantly moderated the foreign remittances and private sector investment relationship. Conclusions-Based on the results, the study concludes that banking sector development has an important influence on foreign remittances and private sector investment nexus. Due to the antagonistic interaction between foreign remittance and banking sector development, the study recommends the use of alternative ways of channeling remittances to private investment such as; issuance of diaspora bonds and appeal for direct investment b y citizens living abroad.

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“…Again some studies also showed that FDI inflows have impact on remittance receiving. Coon and Neumann (2017) analyzed how FDI inflows and remittance inflows are related. They found that FDI complements remittance and the relationship between remittances and FDI is the strongest for low income countries.…”

Section: Fdi Net Inflowsmentioning

confidence: 99%

Economic and Noneconomic Forces on Remittance Receiving: A Panel Analysis of Top Remittance Sending Countries towards Bangladesh

Alam

Khan²

2021

The Economics and Finance Letters

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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. INTRODUCTIONIncome received from the migrant workers of many developing countries has become one of the largest sources of external financing and capital accumulation for gearing up the economic development, reducing poverty and increasing foreign exchange reserve (Abduvaliev & Bustillo, 2019). Bangladesh is a developing market economy and currently it's 41 st largest economy in the world with an estimation of securing 24 th position by 2033 (The Daily Star, 2019). Bangladesh surprised the world by securing top position through achieving 188% GDP growth whereas China achieved 177%, India achieved 117%, and Malaysia achieved 78% in world's GDP growth list in the last 10 years on the basis of current price method as per Spectator Index-2019(Dhaka Tribune, 2019.Remittance receiving of Bangladesh has a big contribution for such surprising economic growth. Bangladesh is in the 3 rd position in Asia and 11 th in the world in terms of remittance recipient of the world (The Daily Star, 2019).

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Follow the Money: Remittance Responses to FDI Inflows

Cited by 12 publications

References 44 publications

Impact of foreign direct investment, remittances and official development assistance on economic growth: panel data approach

Impact of foreign direct investment, remittances and official development assistance on economic growth: panel data approach

Foreign Remittances, Banking Sector Development and Private Sector Investment

Economic and Noneconomic Forces on Remittance Receiving: A Panel Analysis of Top Remittance Sending Countries towards Bangladesh

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