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The remittance inflows - private investment nexus in Asian developing countries: does institutional quality matter?

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  • Van Bon Nguyen

    (UFM Research Team, University of Finance - Marketing (UFM), Ho Chi Minh, Vietnam)

Abstract

The literature illustrates that remittance inflows boost private investment in developing countries. Does it hold for the case of Asian developing countries? Does institutional quality significantly contribute to the remittance inflows - private investment nexus in these countries? We look for answers by studying the influences of institutional quality, remittance inflows, and interaction on the investment of the private sector for a dataset of 25 developing economies in Asia between 2002 and 2020. It employs the twostep difference GMM estimator and the defactored instrumental variables estimator to estimate and test the robustness. The results seem counter-intuitive that remittance inflows crowd in private investment, while institutional quality crowds out it, but their interaction boosts it. Besides, trade openness and economic growth increase, but inflation decreases private investment. The paper provides some policy lessons for developing countries in Asia in improving institutional structure to get more remittances and stimulate private investment.

Suggested Citation

  • Van Bon Nguyen, 2023. "The remittance inflows - private investment nexus in Asian developing countries: does institutional quality matter?," Economic Research Guardian, Mutascu Publishing, vol. 13(1), pages 31-46, June.
    • Handle: RePEc:wei:journl:v:13:y:2023:i:1:p:31-46
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    More about this item

    Keywords

    Institutional Quality; Remittance Inflows; Private Investment; Developing Countries in Asia;
    All these keywords.

    JEL classification:

    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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