Main Article Content
Abstract
This study examines the determinants of workers' remittances and their impact on economic growth in Yemen. Autoregressive Distributed Lag (ARDL) bounds test to co-integration and error correction model (ECM) were applied to data covering the period from 1990 to 2014. According to the model of remittances determinants, workers' remittances in Yemen respond to the macroeconomic conditions of both the home and host countries. In the long run, migrant stock and income levels at the host countries positively and strongly influence the remittance level, with a feeble impact on domestic inflation rates. The effect of the home country's income seems positive but insignificant in explaining the behaviour of remittances level. The economic growth model suggests that, in the long run, the impact of workers' remittances appears to be positive and moderate, with positive and stronger influences observed for financial development and official development assistance. Accordingly, it is recommended that a lesser weight should be given to remittances in the strategic planning process, considering the increasing potential of the conditions in the neighbouring host countries to be changed. In addition, using remittances as a means of economic growth can be enhanced by encouraging migrants to direct their savings towards productive investment activities and via formal channels.
References
- Adelman, Irma, & Taylor, J. E. (1990). Is Structural Adjustment with a Human Face Possible? The Case of Mexico. Journal of Development Studies, 26, 387–407.https://doi.org/10.1080/00220389008422161
- Adenutsi, Deodat E. (2014). Macroeconomic Determinants of Workers' Remittances and Compensation of Employees in Sub-Saharan Africa. The Journal of Developing Areas, 48(1), 337–360.https://doi.org/10.1353/jda.2014.0015
- Agarwal, R., & Horowitz, A. W. (2002). Are international remittances altruism or insurance? Evidence from Guyana using multiple-migrant households. World Development, 30, 2033–2044.https://doi.org/10.1016/s0305-750x(02)00118-3
- Amuedo-Dorantes, C., & Pozo, S. (2004). Worker’s Remittances and the Real Exchange Rate: A Paradox of Gifts. World Development, 32, 1407–1417.https://doi.org/10.1016/j.worlddev.2004.02.004
- Ayda, O.T., Neyapti, B., Metin-Ozcan, K. (2005). Determinants of Workers Remittances: The Case of Turkey. Emerging Markets Finance and Trade, 41(3), 53–69.https://doi.org/10.1080/1540496x.2005.11052609
- Bettin, G., Presbitero, A. F., & Spatafora, N.(2014). Remittances and Vulnerability in Developing Countries (IMF Working Paper NO. WP/14/13).https://doi.org/10.5089/9781484385081.001
- Barajas, A., Chami, R., Fullenkamp, C., Gapen, M., and Montiel, P. (2009). Do Workers’ Remittances Promote Economic Growth? (IMF Working Paper NO. WP/153/09).
- Begum, M. N., & Sutradhar, R. R. (2012). Behaviour of remittance inflows and its determinants in Bangladesh (Bangladesh Bank Working Paper No. 1202).
- Brown, R.L., Durbin, J., & Evans J. M. (1975). Techniques for testing the constancy of regression relations over time. Journal of Royal Statistical Society, Series B,37(2), 149–163.https://doi.org/10.1111/j.2517-6161.1975.tb01532.x
- Chami, R., Fullenkamp, C., & Jahjah, S. (2003). Are Immigrant Remittances Flows a Source of Capital for Development? (IMF Working Paper NO.WP 189/03).https://doi.org/10.5089/9781451859638.001
- Chami, R., Hakura, D., & Montiel, P. (2009). Remittances: An Automatic Output Stabilizer? (IMF Working Paper NO. WP 91/09).https://doi.org/10.5089/9781451872385.001
- Daway-Duacanes, Sarah Lynne. (2015). A note on the effects of remittances and overseas migration on some Philippine statistics. Philippine Review of Economics, 51(1), 95–116.
- Dickey, D., & Fuller, W. (1981). Likelihood Ratio Statistics For Autoregressive Time Series With A Unit Root. Econometrica, 49(S), 1057-72.https://doi.org/10.2307/1912517
- Edwards C.A., & Ureta, M. (2003). International Migration, Remittances and Schooling: Evidence from El Salvador. Journal of Development Economics, 72(2), 429–461.https://doi.org/10.1016/s0304-3878(03)00115-9
- Elbadawi, I. A., & Rocha, R. (1992). Determinants of Expatriate Workers’ Remittances in North Africa and Europe (World Bank Working Paper Series NO. 1038).
- El-Sakka, M., & MaNabb, R. (1999). The Macroeconomic Determinants of Migrant Remittances. World Development, 27, 1493–1502.https://doi.org/10.1016/s0305-750x(99)00067-4
- ESCWA, (2014). Directing remittances of Yemeni workers abroad and migrants towards development. https://www.unescwa.org/sites/www.unescwa.org/files/page_attachments/y1-1.pdf, 10/10/2020.
- Ezeoha, A.E. (2013). Financial determinants of international remittance flows to the Sub-Saharan African region. International Migration, 51(s1), e84–e97.https://doi.org/10.1111/imig.12061
- Fajnzylber, P., & Lopez, J. H. (2007), Close to Home: The Development Impact of Remittances in Latin America, mimeo (Washington: World Bank).
- Freund, C., & Spatafora, N. (2008). Remittances, Transaction Costs, Determinants and Informality. Journal of Development Economics, 86(2), 356–366.https://doi.org/10.1016/j.jdeveco.2007.09.002
- Giuliano, P., & Ruiz-Arranz, M. (2009). Remittances, financial development, and growth. Journal of Development Economics, 90, 144–152.https://doi.org/10.1016/j.jdeveco.2008.10.005
- Glytsos, N. (1988). Remittances in Temporary Migration: A Theoretical Model and Its Testing with the Greek-German Experience. Review of World Economics, 124, 524–549.https://doi.org/10.1007/bf02708664
- Glytsos, N. (1993). Measuring the income effects of migrant remittances: A methodological approach applied to Greece. Economic Development and Cultural Change, 42, 131–168.https://doi.org/10.1086/452068
- Glytsos, N.P. (2002). A Model of Remittances Determination Applied to Middle East and North Africa Countries. Centre of Planning and Economic Research 73. https://econwpa.ub.uni-muenchen.de/econ-wp/lab/papers/0505/0505016.doc.gz
- Gupta, P. (2005). Macroeconomic Determinants of Remittances: Evidence from India (IMF Working Paper No. WP 224/05).https://doi.org/10.5089/9781451862430.001
- Higgins, M., Hysenbegasi, A., & Pozo, S. (2004). Exchange-rate uncertainty and workers’ remittances. Applied Financial Economics, 14(6), 403–411.https://doi.org/10.1080/09603100410001673630
- Hor, C., Pheang, P. (2017). Analysis Determinant Factors Effect on Migrant Workers’ Remittances Flow to the CLMV Countries. International Journal of Economics and Financial Issues,7(2), 202–207.
- Katseli, L., & Glytsos, N. (1986). Theoretical and Empirical Determinants of International LabourMobility: A Greek-German Perspective (Centre for Economic Policy Research Working Paper NO. 148).
- Kroft, Kory, & Huw, Lloyd-Ellis., (2002). Further Cross—Country Evidence on the Link Between Growth, Volatility and Business Cycles. Manuscript for preparation. http://qed.econ.queensu.ca/pub/faculty/lloyd-ellis/papers/kory.pdf.
- Lartey, E. K., Mandelman, F. S., & Acosta P. A. (2012). Remittances, Exchange RateRegimes and the Dutch Disease: A Panel Data Analysis. Review of International Economics, 20(2), 377–395.https://doi.org/10.1111/j.1467-9396.2012.01028.x
- Lianos, T.P. (1997). Factors Determining Migrant Remittances: The Case of Greece. International Migration Review,31(1), 72-87.https://doi.org/10.1177/019791839703100104
- Lucas, R., & Stark, O. (1985). Motivations to Remit: Evidence from Botswana. The Journal of Political Economy, 93, 901-918.https://doi.org/10.1086/261341
- Lucas, R. E. B. (2005). International Migration and Economic Development. http://www.e-elgar.com/shop/isbn/9781845423834.
- Lueth, E., & Ruiz-Arranz, M. (2006). A Gravity Model of Workers’ Remittances (IMF Working Paper NO. WP/290/06).https://doi.org/10.5089/9781451865509.001
- McCracken, S., Carlyn, Ramlogan-Dobson, & Stack, Marie M. (2017). A gravity model of remittance determinants: evidence from Latin America and the Caribbean. Regional Studies, 51(5), 737–749. https://doi.org/10.1080/00343404.2015.1133904
- Mesnard, A. (2001). Temporary migration and intergenerational mobility. Louvain Economic Review, 67(1), 59–88.
- Mim, S., & Ali, Mohamed S. (2012). Through Which Channels Can Remittances Spur Economic Growth in MENA Countries?. International Journal of Economic Perspectives, 6(3), 279–294.https://doi.org/10.2139/ssrn.2006818
- Narayan, P.K. (2004). Reformulating critical values for the bounds F-statistics approach to co-integration: an application to the tourism demand model for Fiji (Department of Economics Discussion Papers No. 02/04 Monash University).
- Panda, P. D., &Trivedi, P. (2015). Macroeconomic determinants of remittances: A cross-country analysis. Journal of International Economics,6(2), 83–100.
- Pesaran, M.H., & Shin, Y. (1996). Co-integration and Speed of Convergence to Equilibrium. Journal of Econometrics, 71(1-2), 117–143.https://doi.org/10.1016/0304-4076(94)01697-6
- Pesaran, M.H., Shin, Y., & Smith, R.J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–326.https://doi.org/10.1002/jae.616
- Phillips, P. C., & Perron, P. (1988). Testing For A Unit Root İn Time Series Regression. Biometrika, 75(2), 335–346.https://doi.org/10.1093/biomet/75.2.335
- Rabbi, F., Chowdhury, M. B., & Hasan, M. (2013). Macroeconomic impact of remittances and the Dutch Disease in a developing country. American Journal of Economics, 3(5C), 156–60.
- Ratha, D. (2013). The Impact of Remittances on Economic Growth and Poverty Reduction. Migration Policy Institute, Washington, D.C. https://www.migrationpolicy.org/pubs/Remittances-PovertyReduction.pdf
- Rempel, H., & Lobdell, R. (1978). The role of Urban to Rural Remittances in rural development. Journal of Development Studies, 14, 324-341.https://doi.org/10.1080/00220387808421678
- Singh, R., Haacker, M., Lee, K-W., & Goff, M.L. (2011). Determinants and macroeconomic impact of remittances in Sub-Saharan. Africa Journal of African Economies, 20(2), 312–340. https://doi.org/10.1093/jae/ejq039
- Swamy, G. (1981). International Migrant Workers’ Remittances: Issues and Prospects (World Bank Staff Working Paper NO. 481).
- Tabit, S., Moussir, C.E. (2016). Macroeconomic determinants of migrants’ remittances: Evidence from a panel of developing countries. International Journal of Business and Social Research,6(7),1–11.https://doi.org/10.18533/ijbsr.v6i7.969
- UNCATAD, (2020). Economic Trends, Trade Indicators, and External Financial Resources, https://unctadstat.unctad.org/wds/ReportFolders/reportFolders.aspx
- Vargas - Silva, C., & Huang, P.(2006). Macroeconomic Determinants of Worker’s Remittances: Host Versus Home Country’s Economic Conditions. Journal of International Trade & Economic Development,15(1), 81–99.https://doi.org/10.1080/09638190500525779
- World Bank, (2020a). World Development Indicators Data bank, https://databank.worldbank.org/source/world-development-indicators#.
- World Bank, (2020b). Migration and Remittances Data, https://www.worldbank.org/en/topic/migrationremittancesdiasporaissues/brief/migration-remittances-data
- World Bank, (2020c). Remittances to low-and Middle-income Countries, https://blogs.worldbank.org/peoplemove/data-release-remittances-low-and-middle-income-countries-track-reach-551-billion-2019.
- Yang, Dean, & Choi, HwaJung (2007). Are Remittances Insurance? Evidence from Rainfall Shocks in the Philippines. World Bank Economic Review, 21(2), 219–248.https://doi.org/10.1093/wber/lhm003
- Yoshino, N., Farhad, Taghizadeh-Hesary, & Miyu, O. (2019). Determinants of International Remittance Inflows in Middle Income Countries in MENA, Asia and Pacific (Asian Development Bank Institute Working Paper Series No. 964).https://doi.org/10.2139/ssrn.3541026
Article Details
Copyright (c) 2021 Essa A. Alhannom, Ghaleb S. Mushabeb
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Management & Economics Research Journal is licensed under a (CC BY-NC 4.0).
The following guidelines apply to all users:
- 1-Individuals may view, download, print, or save Journal content for research and teaching purposes.
- 2-Any use and/or copies of this journal in whole or part must include the customary bibliographic citation, including author attribution, date, article title, the Journal name, and website address.
Authors who publish with this journal agree to the following terms:
a) Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a (CC BY-NC 4.0) that allows others to share and adapt the work with an acknowledgement of the work's authorship and initial publication in this journal.
b) Authors can enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
c) Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) before and during the submission process, as it can lead to productive exchanges and earlier and greater citation of published work. Where authors include such work in an institutional repository or on their website, we request that they include a statement acknowledging the Management & Economics Research journal, including the journal's name, the volume and issue, and a web link to the journal item.
Associate Professor of Economics
Associate Professor of Economics
