IDEAS home Printed from https://ideas.repec.org/a/wly/jintdv/v36y2024i2p1468-1488.html
   My bibliography  Save this article

Empirical evidence on the relationship between migrants' remittances and private investment in Burkina Faso: A dynamic simultaneous equation model

Author

Listed:
  • Abdoul Hadirou Yoda
  • Achille Augustin Diendere

Abstract

This research explores the channels through which migrant remittances can promote private investment. The research method favours a dynamic simultaneous equation model estimated using a combination of the bootstrap method and the three‐stage least squares estimator to account for the interdependence between remittances and private investment. The study area is Burkina Faso, and the period of analysis covers the period 1985–2021. One of the main findings is that the level of corruption risk and the demographic dependency ratio are important transmission channels. Findings suggest creating an institutional framework that enhances the level of transparency and accountability and accelerates the demographic transition process.

Suggested Citation

  • Abdoul Hadirou Yoda & Achille Augustin Diendere, 2024. "Empirical evidence on the relationship between migrants' remittances and private investment in Burkina Faso: A dynamic simultaneous equation model," Journal of International Development, John Wiley & Sons, Ltd., vol. 36(2), pages 1468-1488, March.
  • Handle: RePEc:wly:jintdv:v:36:y:2024:i:2:p:1468-1488
    DOI: 10.1002/jid.3862
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/jid.3862
    Download Restriction: no

    File URL: https://libkey.io/10.1002/jid.3862?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Hrushikesh Mallick, 2012. "Inflow Of Remittances And Private Investment In India," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 57(01), pages 1-22.
    2. Stark, Oded & Lucas, Robert E B, 1988. "Migration, Remittances, and the Family," Economic Development and Cultural Change, University of Chicago Press, vol. 36(3), pages 465-481, April.
    3. Stark, Oded & Bloom, David E, 1985. "The New Economics of Labor Migration," American Economic Review, American Economic Association, vol. 75(2), pages 173-178, May.
    4. Cumby, Robert E & Huizinga, John, 1992. "Testing the Autocorrelation Structure of Disturbances in Ordinary Least Squares and Instrumental Variables Regressions," Econometrica, Econometric Society, vol. 60(1), pages 185-195, January.
    5. Stark, Oded, 1978. "Economic-Demographic Interactions in Agricultural Development: The Case of Rural-to-Urban Migration," EconStor Books, ZBW - Leibniz Information Centre for Economics, volume 6, number 232285, March.
    6. Jorge Durand & William Kandel & Emilio Parrado & Douglas Massey, 1996. "International migration and development in mexican communities," Demography, Springer;Population Association of America (PAA), vol. 33(2), pages 249-264, May.
    7. Jean-Paul Azam & Flore Gubert, 2006. "Migrants' Remittances and the Household in Africa: A Review of Evidence," Journal of African Economies, Centre for the Study of African Economies, vol. 15(2), pages 426-462, December.
    8. Salas, Vania B., 2014. "International Remittances and Human Capital Formation," World Development, Elsevier, vol. 59(C), pages 224-237.
    9. Breusch, T S & Pagan, A R, 1979. "A Simple Test for Heteroscedasticity and Random Coefficient Variation," Econometrica, Econometric Society, vol. 47(5), pages 1287-1294, September.
    10. Alesina, Alberto & Özler, Sule & Roubini, Nouriel & Swagel, Phillip, 1996. "Political Instability and Economic Growth," Journal of Economic Growth, Springer, vol. 1(2), pages 189-211, June.
    11. Démurger, Sylvie & Wang, Xiaoqian, 2016. "Remittances and expenditure patterns of the left behinds in rural China," China Economic Review, Elsevier, vol. 37(C), pages 177-190.
    12. Ebenezer A Olubiyi, 2013. "Workers’ Remittances, Governance Institution and Private Investment in Nigeria," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 5(1), pages 063-081, June.
    13. Zeeshan Khan & Fazli Rabbi & Manzoor Ahmad & Yang Siqun, 2019. "Remittances inflow and private investment: a case study of South Asian economies via panel data analysis," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 32(1), pages 2723-2742, January.
    14. Combes, Jean-Louis & Ebeke, Christian, 2011. "Remittances and Household Consumption Instability in Developing Countries," World Development, Elsevier, vol. 39(7), pages 1076-1089, July.
    15. Laetitia Duval & François-Charles Wolff, 2016. "Do remittances support consumption during crisis? Evidence from Kosovo," Oxford Development Studies, Taylor & Francis Journals, vol. 44(4), pages 479-492, October.
    16. Umar Mohammed & Erdal Tanas Karagöl, 2023. "Remittances, institutional quality and investment in Sub-Saharan Africa," Journal of Business and Socio-economic Development, Emerald Group Publishing Limited, vol. 3(4), pages 322-338, January.
    17. repec:dau:papers:123456789/5126 is not listed on IDEAS
    18. Larry A. Sjaastad, 1970. "The Costs and Returns of Human Migration," Palgrave Macmillan Books, in: Harry W. Richardson (ed.), Regional Economics, chapter 9, pages 115-133, Palgrave Macmillan.
    19. Chantha Hor & Pheara Pheang, 2017. "Analysis Determinant Factors Effect on Migrant Workers' Remittances Flow to the CLMV Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 7(2), pages 202-207.
    20. Ando, Masakazu & Hodoshima, Jiro, 2007. "A note on bootstrapped White's test for heteroskedasticity in regression models," Economics Letters, Elsevier, vol. 97(1), pages 46-51, October.
    21. Adams Jr., Richard H., 2009. "The Determinants of International Remittances in Developing Countries," World Development, Elsevier, vol. 37(1), pages 93-103, January.
    22. Raju Jan Singh, 2010. "CASE STUDY: From shock absorber to shock transmitter: Determinants of remittances in Sub-Saharan Africa," Migration Letters, Migration Letters, vol. 7(2), pages 231-240, October.
    23. Abdilahi Ali & Baris Alpaslan, 2013. "Do Migrant Remittances Complement Domestic Investment? New Evidence from Panel Cointegration," Economics Discussion Paper Series 1308, Economics, The University of Manchester.
    24. Arvind K. Jain, 2001. "Corruption: A Review," Journal of Economic Surveys, Wiley Blackwell, vol. 15(1), pages 71-121, February.
    25. Zelealem Yiheyis & Kasahun Woldemariam, 2016. "The Effect of Remittances on Domestic Capital Formation in Select African Countries: A Comparative Empirical Analysis," Journal of International Development, John Wiley & Sons, Ltd., vol. 28(2), pages 243-265, March.
    26. Sanjeev Gupta & Hamid Davoodi & Rosa Alonso-Terme, 2002. "Does corruption affect income inequality and poverty?," Economics of Governance, Springer, vol. 3(1), pages 23-45, March.
    27. Forget Mingiri Kapingura, 2018. "Relationship between foreign capital flows, domestic investment and savings in the SADC region," Development Southern Africa, Taylor & Francis Journals, vol. 35(4), pages 554-568, July.
    28. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(3), pages 681-712.
    29. A. Nurul Hossain & Syed Hasanuzzaman, 2013. "Remittances and investment nexus in Bangladesh: an ARDL bounds testing approach," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 60(4), pages 387-407, December.
    30. Diego E. Vacaflores, 2018. "Beyond Altruism and Self-interest: The Growing Importance of External Factors in the Determination of Remittances Flowing to Latin America," International Economic Journal, Taylor & Francis Journals, vol. 32(2), pages 235-255, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Achille Augustin DIENDERE & Abdoul Hadirou YODA, 2023. "Understanding the effects of migrant remittances on agricultural production in West African countries," Economics Bulletin, AccessEcon, vol. 43(1), pages 398-412.
    2. 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.
    3. Aisha Ismail & Kashif Rashid, 2014. "Time series analysis of the nexus among corruption, political instability and judicial inefficiency in Pakistan," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(5), pages 2757-2771, September.
    4. Nelson Ramírez-Rondán & Saki Bigio, 2006. "Corruption and Development Indicators: An Empirical Review," Working Papers 2006-007, Banco Central de Reserva del Perú.
    5. Ahmet Faruk AYSAN & Mustapha Kamel NABLI & Marie‐Ange VÉGANZONÈS‐VAROUDAKIS, 2007. "Governance Institutions And Private Investment: An Application To The Middle East And North Africa," The Developing Economies, Institute of Developing Economies, vol. 45(3), pages 339-377, September.
    6. Dustmann, Christian & Mestres, Josep, 2010. "Remittances and temporary migration," Journal of Development Economics, Elsevier, vol. 92(1), pages 62-70, May.
    7. Poelhekke, Steven, 2011. "Urban growth and uninsured rural risk: Booming towns in bust times," Journal of Development Economics, Elsevier, vol. 96(2), pages 461-475, November.
    8. Mustapha Kamel Nabli, 2007. "Breaking the Barriers to Higher Economic Growth : Better Governance and Deeper Reforms in the Middle East and North Africa," World Bank Publications - Books, The World Bank Group, number 6914.
    9. Abramitzky, Ran & Boustan, Leah Platt & Eriksson, Katherine, 2013. "Have the poor always been less likely to migrate? Evidence from inheritance practices during the age of mass migration," Journal of Development Economics, Elsevier, vol. 102(C), pages 2-14.
    10. Ralph Chami & Connel Fullenkamp & Samir Jahjah, 2005. "Are Immigrant Remittance Flows a Source of Capital for Development?," IMF Staff Papers, Palgrave Macmillan, vol. 52(1), pages 55-81, April.
    11. Aysan, Ahmet Faruk & Nabli, Mustapha Kamel & Veganzones-Varoudakis, Marie-Ange, 2006. "Governance and private investment in the Middle East and North Africa," Policy Research Working Paper Series 3934, The World Bank.
    12. Edwin Le Heron & Nicolas Yol, 2019. "The macroeconomic effects of migrants' remittances in Moldova: a stock–flow consistent model," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 16(1), pages 31-54, April.
    13. repec:pdn:wpaper:79 is not listed on IDEAS
    14. Olmos, Lorena & Bellido, Héctor & Román-Aso, Juan A., 2020. "The effects of mega-events on perceived corruption," European Journal of Political Economy, Elsevier, vol. 61(C).
    15. Quinones, Esteban J. & Barham, Bradford L., 2018. "Endogenous Selection, Migration and Occupation Outcomes for Rural Southern Mexicans," Staff Paper Series 587, University of Wisconsin, Agricultural and Applied Economics.
    16. Aleksandr Grigoryan & Knar Khachatryan, 2018. "Remittances and Emigration Intentions: Evidence from Armenia," CERGE-EI Working Papers wp626, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    17. Daniel Rauhut & Birgit Aigner-Walder & Rahel M. Schomaker, 2023. "Economic Theory and Migration," Springer Books, in: The Economics of Immigration Beyond the Cities, chapter 0, pages 21-50, Springer.
    18. Bukari, Chei & Seth, Suman & Yalonetkzy, Gaston, 2024. "Corruption can cause healthcare deprivation: Evidence from 29 sub-Saharan African countries," World Development, Elsevier, vol. 180(C).
    19. Andrew Hodge & Sriram Shankar & D. S. Prasada Rao & Alan Duhs, 2011. "Exploring the Links Between Corruption and Growth," Review of Development Economics, Wiley Blackwell, vol. 15(3), pages 474-490, August.
    20. Kazi Abdul, Mannan, 2016. "Labour migration between developing economy to developing country: A case study of Bangladesh and Malaysia," MPRA Paper 97429, University Library of Munich, Germany, revised 2016.
    21. Le Thanh Tung, 2018. "The Impact Of Remittances On Domestic Investment In Developing Countries: Fresh Evidence From The Asia-Pacific Region," Organizations and Markets in Emerging Economies, Faculty of Economics, Vilnius University, vol. 9(2).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:jintdv:v:36:y:2024:i:2:p:1468-1488. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/journal/5102/home .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.