Does the Remittance Generate Economic Growth in the South East European Countries? Cover Image

Does the Remittance Generate Economic Growth in the South East European Countries?
Does the Remittance Generate Economic Growth in the South East European Countries?

Author(s): Kaltrina Kajtazi, Besnik Taip Fetai
Subject(s): National Economy, Economic development
Published by: Editura Universităţii »Alexandru Ioan Cuza« din Iaşi
Keywords: economic growth; remittances; panel data; Southeast European countries;

Summary/Abstract: This paper aims to examine the causal relationships between remittances and economic growth in 10 Southeast European developing countries, including Greece as a developed country. The research uses various econometric techniques, such as OLS, fixed-effects model, random-effects model, and Hausman-Taylor IV estimators. The regression results have shown up that there is a positive link between remittances and economic growth in 10 Southeastern European countries. Findings support the hypothesis that the remittance inflows generate economic growth in 10 Southeast European countries. Despite this, a positive relationship is also revealed between foreign direct investment, final consumption expenditure, gross capital formation, exports, and economic growth. The only exchange rate does not have a causal link on economic growth, meaning that the exchange rate does not affect economic growth. Since the remittances have a positive effect on the economic growth, and they represent a large source of external financing in Southeast European countries, the government should implement the right policies to reflect on encouraging and channelizing the remittance inflows for investment purposes, which in turn lead to a reduction of migration and unemployment. The study is original and makes effort to promote the role and significance of remittance inflows in the Southeast European developing countries, including Greece. The findings of the study might be valuable for Governments of these countries and other policymakers to channels remittances for investment purposes.

  • Issue Year: 69/2022
  • Issue No: 1
  • Page Range: 57-67
  • Page Count: 11
  • Language: English