The Impact of Remittances on Economic Growth in Ethiopia

Tassew Dufera Tolcha ., Dr. P. Nandeeswar Rao .


Nowadays, remittance has risen in a significant way in developing countries. But different scholars in different countries differently characterize its impact on economic growth.  Depending on this debate of remittance, two separate views or school of thoughts was created; optimist and pessimist views. The optimists agreed in that remittances have a positive effect on the remit receiving country through reducing poverty and stimulating the economic growth. However, according to the pessimists view, remittance shouldn’t encourage the economic growth, rather it retard the economy through increasing dependency on the foreign by remit receiving countries and making the extreme consumption.   Given such important literature this study was undertaken to add on existing literature by assessing the impact of remittances on Ethiopian economic growth over the period 1981 – 2012. ARDL model is used for time series estimation. An empirical result from the study reveals that there is a short run significant impact of remittances on economic growth while it affect the economy negatively in the long run.


ARDL, Remittance, Economic growth

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