Remittance and Economic Growth Nexus: An Econometric Investigation in Developing Countries
DOI:
https://doi.org/10.61143/umyu-jafr.2(1)2021.009Keywords:
Gross Domestic Product, Remittances, Fixed Effect Model, Random Effect Model, Pooled Ordinary Least Square ModelAbstract
This study examines the nexus between remittance and economic growth in developing countries. The study used panel data set of 20 developing countries across the six world’s regions from 2010 to 2020. This study considered gross domestic product as dependent variable, remittances, gross fixed capital formation, human labour force, foreign direct investment and trade openness as the independent variables. The panel data study is carried-out using fixed effect model, random effect model and the pooled OLS. But after robustness test, this study choose pooled OLS among other models of fixed effect and random effect models. Findings reveal that remittance has a significant positive impact on economic growth when the pooled OLS is considered. It recommends in this study that governments in developing countries should employ means of reducing informal flow of remittances and encourage the use of formal flows. Secondly, governments should ensure good accountability of the flow of remittances in their respective countries.
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