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Impacts of FDI and Remittance Inflows in Developing Asia: A Comparative Dynamic Panel Study

Author

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  • Madhabendra Sinha
  • Darius Tirtosuharto
  • Partha Pratim Sengupta

Abstract

The paper explores the macroeconomic impacts of foreign direct investment (FDI) and remittance inflows in developing Asia. Asian developing economies are identified as the highest receiver of remittances and the region has also been consistently performing well in receiving of FDI inflows. As an external source of capital formation, inflows of FDI and remittances affect foreign exchange rates and output. This study provides empirical evidence on the impact of FDI and remittances on real effective exchange rates and GDP in Asian developing countries using data over the period of 1981‐2015. Dynamic panel GMM technique is employed to overcome the endogeneity issue. Findings imply that both inflows of FDI and remittances have positive and significant impacts on exchange rates and GDP in developing Asia. Hence, remittances carry greater influence and significant impacts due to relatively stable inflows.

Suggested Citation

  • Madhabendra Sinha & Darius Tirtosuharto & Partha Pratim Sengupta, 2019. "Impacts of FDI and Remittance Inflows in Developing Asia: A Comparative Dynamic Panel Study," Economic Papers, The Economic Society of Australia, vol. 38(4), pages 311-328, December.
    • Handle: RePEc:bla:econpa:v:38:y:2019:i:4:p:311-328
    DOI: 10.1111/1759-3441.12260
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    Cited by:

    1. Ferry Syarifuddin & Maman Setiawan, 2021. "Capital Flow Amid The Covid-19 Pandemic: Cross-Country Contagion Effect Among Asean5 And Projection Of The Impacts For The Indonesian Economy," Working Papers WP/08/2021, Bank Indonesia.
    2. Hemachandra Padhan & Deepak Kumar Behera & Santosh Kumar Sahu & Umakant Dash, 2023. "Does Corruption Hinderance Economic Growth Despite Surge of Remittance and Capital Inflows Since Economic Liberalization in an Emerging Economy, India," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(1), pages 426-449, March.
    3. Anthanasius G. Paul, 2021. "The effects of industrial production, inflow remittances, and FDI on the rate of Inflation in Liberia 2000-2020," International Journal of Science and Business, IJSAB International, vol. 5(9), pages 181-191.
    4. Muntasir Murshed & Seemran Rashid, 2020. "An Empirical Investigation of Real Exchange Rate Responses to Foreign Currency Inflows: Revisiting the Dutch Disease Phenomenon in South Asia," The Economics and Finance Letters, Conscientia Beam, vol. 7(1), pages 23-46.
    5. Md. Ahasan Ul Haque & Md. Golam Kibria & Md. Muhaiminul Islam Selim, 2021. "Effects of Foreign Aid and Remittances Flows on Saving and Investment in Developing South Asia: Panel Data Study," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 7(2), pages 21-27, 06-2021.
    6. Peter Nderitu GITHAIGA, 2019. "Foreign Remittances, Private Sector Investment and Banking Sector Development," Journal of Economics and Financial Analysis, Tripal Publishing House, vol. 3(2), pages 85-112.

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