How Does the Flow of Remittances Affect the Trade Balance of the Middle East and North Africa?

30 Pages Posted: 14 Dec 2016

See all articles by Mohammad Reza Farzanegan

Mohammad Reza Farzanegan

University of Marburg - Center for Near and Middle Eastern Studies (CNMS)

Sherif Maher Hassan

Suez Canal University - Faculty of Commerce; The British University in Egypt - Faculty of Business Administration, Economics, and Political Science

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Date Written: November 08, 2016

Abstract

Middle Eastern and North African (MENA) economies have had the highest degree of dependency on received remittances worldwide over the last three decades. The region has also had the highest non-oil external trade balance deficit among developing countries. We examine the role of remittances in the trade balance of 11 labor-abundant MENA countries. Our panel regression analysis shows that the inflow of remittances has had an increasing effect on trade deficits by triggering import-led consumption expenditures. The results are robust after controlling for other drivers of trade deficit and fixed effects.

Keywords: remittances, Middle East and North Africa, trade balance, panel regression

JEL Classification: D140, F220, F240

Suggested Citation

Farzanegan, Mohammad Reza and Hassan, Sherif Maher, How Does the Flow of Remittances Affect the Trade Balance of the Middle East and North Africa? (November 08, 2016). CESifo Working Paper Series No. 6172, Available at SSRN: https://ssrn.com/abstract=2885249

Mohammad Reza Farzanegan

University of Marburg - Center for Near and Middle Eastern Studies (CNMS) ( email )

Deutschhausstraße 12
Marburg, 35037
Germany

HOME PAGE: http://www.uni-marburg.de/cnms/wirtschaft

Sherif Maher Hassan (Contact Author)

Suez Canal University - Faculty of Commerce

Ismailia
Egypt

HOME PAGE: http://foc.scuegypt.edu.eg/?page=pages&page_id=9

The British University in Egypt - Faculty of Business Administration, Economics, and Political Science ( email )

Egypt

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