Remittances, Institutions and Economic Growth

29 Pages Posted: 17 May 2006

See all articles by Natalia Catrinescu

Natalia Catrinescu

Harvard University

Miguel A. Leon-Ledesma

University of Kent - Department of Economics

Matloob Piracha

University of Kent - Department of Economics; IZA Institute of Labor Economics

Bryce Quillin

World Bank

Date Written: May 2005

Abstract

There is considerable debate regarding the relative contribution of international migrants' remittances to sustainable economic development. While the rates and levels of officially recorded remittances to developing countries has increased enormously over the last decade, academic and policy-oriented research has not come to a consensus over whether remittances contribute to longer-term growth by building human and financial capital or degrade long-run growth by creating labor substitution and "Dutch disease" effects. This paper suggests that contradictory findings have emerged when looking at the remittances-growth link because previous studies have not correctly controlled for endogeneity. Using Dynamic Data Panel estimates we find that remittances exert a weakly positive impact on long-term macroeconomic growth. The paper also considers the proposition that the longer-term developmental impact of remittances is increased in the presence of sound economic policies and institutions.

Keywords: International migration, remittances, growth, institutions

JEL Classification: F22, O15, O47

Suggested Citation

Catrinescu, Natalia and Leon-Ledesma, Miguel and Piracha, Matloob and Quillin, Bryce, Remittances, Institutions and Economic Growth (May 2005). IZA Discussion Paper No. 2139. Available at SSRN: https://ssrn.com/abstract=902342

Natalia Catrinescu

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

Miguel Leon-Ledesma

University of Kent - Department of Economics ( email )

Keynes College
Kent, CT2 7NP
United Kingdom
00 44 0 1227 823026 (Phone)
00 44 0 1227 827850 (Fax)

HOME PAGE: http://www.ukc.ac.uk/economics/mal/

Matloob Piracha (Contact Author)

University of Kent - Department of Economics ( email )

Keynes College
Kent, CT2 7NP
United Kingdom

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Bryce Quillin

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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