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Remittances and economic growth in Africa, Asia, and Latin American-Caribbean countries: a panel unit root and panel cointegration analysis

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  • Christian Nsiah
  • Bichaka Fayissa

Abstract

This study estimates the macroeconomic impact of remittances and some control variables such as openness of the economy, capital/labor ratio, and economic freedom on the economic growth of African, Asian, and Latin American-Caribbean countries using newly developed panel unit-root tests, cointegration tests, and Panel Fully Modified OLS (PFMOLS). We use annual panel data from 1985–2007for 64 countries consisting of 29 from Africa, 14 from Asia, and 21 from Latin America and the Caribbean region, respectively. We find that remittances, openness of the economy, and capital labor ratio have positive and significant effect on economic growth for all regions as a group and in each of the three in study. While the economic freedom index also has a positive and significant effect on growth in Africa and Latin America, however, its effect on the economic growth of Asia is mixed. Copyright Springer Science+Business Media, LLC 2013

Suggested Citation

  • Christian Nsiah & Bichaka Fayissa, 2013. "Remittances and economic growth in Africa, Asia, and Latin American-Caribbean countries: a panel unit root and panel cointegration analysis," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 37(3), pages 424-441, July.
    • Handle: RePEc:spr:jecfin:v:37:y:2013:i:3:p:424-441
    DOI: 10.1007/s12197-011-9195-6
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    More about this item

    Keywords

    Workers’ Remittances; Economic Growth; Unit-Root Tests; Error Correction Model; PFMOLS; Panel Data; Africa; Asia; Latin America/Caribbean; E21; F21; G22; J61; O16;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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