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Financing Growth through Remittances and Foreign Direct Investment: Evidences from Balkan Countries

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  • Esmeralda Jushi

    (Department of Economics, Epoka University, 1032 Tirana, Albania)

  • Eglantina Hysa

    (Department of Economics, Epoka University, 1032 Tirana, Albania)

  • Arjona Cela

    (Department of Economics, Epoka University, 1032 Tirana, Albania)

  • Mirela Panait

    (Department of Cybernetics, Economic Informatics, Finance and Accounting, Petroleum-Gas University of Ploiesti, 100680 Ploiesti, Romania
    Institute of National Economy, 010374 Bucharest, Romania)

  • Marian Catalin Voica

    (Department of Cybernetics, Economic Informatics, Finance and Accounting, Petroleum-Gas University of Ploiesti, 100680 Ploiesti, Romania)

Abstract

The ultimate goal of central banks, worldwide, is to promote the foundations for sustainable economic growth. In the case of developing economies, in particular, such objective requires time, huge efforts, attention, and plenty of resources in order to be accomplished to the fullest degree. This paper thoroughly investigates key factors affecting Balkan countries’ economic development (as measured by gross domestic product (GDP) growth), focusing especially on the impact of remittances. The analysis was done over an 18-year time interval (2000–2017) and builds on 144 observations. The data figures were retrieved from the World Bank database while two dummies were created to test the impact of the last financial crisis (2008–2012). Econometric tools were employed to carry out a broad analysis on the interdependencies that exist and, in particular, to determine the role of remittance income on growth. The vector auto regressive model was estimated using EViews software, and was used to come up with relevant insights. Empirical findings suggest the following: population growth, remittances, and labor force participation are insignificant factors for sustainable growth. On the other hand, previous levels of GDP, trade, and foreign direct investments (FDIs) appear to be relevant for the predictor. This research provides up-to-date conclusions, which can be considered during the decision-making process of central banks, as well as by government policymakers.

Suggested Citation

  • Esmeralda Jushi & Eglantina Hysa & Arjona Cela & Mirela Panait & Marian Catalin Voica, 2021. "Financing Growth through Remittances and Foreign Direct Investment: Evidences from Balkan Countries," JRFM, MDPI, vol. 14(3), pages 1-17, March.
    • Handle: RePEc:gam:jjrfmx:v:14:y:2021:i:3:p:117-:d:514794
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    2. Bucevska Vesna, 2022. "Impact of Remittances on Economic Growth: Empirical Evidence from South-East European Countries," South East European Journal of Economics and Business, Sciendo, vol. 17(1), pages 79-94, June.
    3. Md. Saiful Islam & Ibrahim A. Alhamad, 2023. "Do personal remittance outflows impede economic growth in Saudi Arabia? The role of trade, labor force, human, and physical capital," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-9, December.
    4. Tomiwa Sunday Adebayo & Abraham Ayobamiji Awosusi & Husam Rjoub & Mirela Panait & Catalin Popescu, 2021. "Asymmetric Impact of International Trade on Consumption-Based Carbon Emissions in MINT Nations," Energies, MDPI, vol. 14(20), pages 1-19, October.
    5. Md. Saiful Islam, 2022. "Do personal remittances influence economic growth in South Asia? A panel analysis," Review of Development Economics, Wiley Blackwell, vol. 26(1), pages 242-258, February.
    6. Yixing Yang & Md. Qamruzzaman & Mohd Ziaur Rehman & Salma Karim, 2021. "Do Tourism and Institutional Quality Asymmetrically Effects on FDI Sustainability in BIMSTEC Countries: An Application of ARDL, CS-ARDL, NARDL, and Asymmetric Causality Test," Sustainability, MDPI, vol. 13(17), pages 1-29, September.
    7. Abdul-Malik Abdulai, 2023. "The impact of remittances on economic growth in Ghana: An ARDL bound test approach," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(2), pages 2243189-224, June.

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