Sociology

Sample (material)

Investment (military)

Consumption (sociology)

Social science

Demographic economics

Economic growth

Politics

Macroeconomics

Political science

Econometrics

Instrumental variable

Economics

Generalized method of moments

Chemistry

Foreign direct investment

Monetary economics

Remittance

Chromatography

Panel data

Developing country

Journal of International Trade & Economic Development

This paper provides original econometric evidence on whether international remittance transfers spur economic growth based on data for a sample of 49 developing countries during the period 2001-2013. Using Panel Smooth Transition Regression (PSTR), difference and system generalized methods of moment models, we find two main results. First, remittances have a positive and significant impact on economic growth in developing countries, while aid and foreign direct investments have insignificant impact. Secondly, as far as the nonlinear relationship is concerned, we find two extreme regimes with a sharp shift characterizing the remittance–growth relationship, with respect to conditional variables, where the remittances effects are positive and significant under the first regime and negative or insignificant under the second. Our findings suggest that the nonlinear relationship between remittances and growth mainly depends on financial development and investment, and less on remittance level and consumption.

Do remittances spur economic growth? Evidence from developing countries