The Impact of Remittances on Economic Growth in Ethiopia

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

Abstract


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.


Keywords


ARDL, Remittance, Economic growth

Full Text:

PDF

References


Abdih Y., Chami R., Dagher J.and Montiel P. (2008). Remittances and Institutions: Are Remittances a Curse? IMF working paper No: 29.International Monetary Fund, Washington DC.

Aldaba, F. (2004):“The Economics and Politics of Overseas Migration in the Philippines”. Paper presented at the forum titled: Overseas Filipinos and the 2004 Elections. OFW: Journalism Consortium and the Friedrich Ebert Stiftung. Manila

Andersson, L. (2012). Migration, Remittances and Household Welfare in Ethiopia.

Aredo, D. (2005). Migrant Remittances, Shocks and Poverties in Urban Ethiopia: an Analysis of Micro Level Panel Data.

Barro, R. J. (1990). Government Spending in a Simple Model of Endogenous Growth. Journal of Political Economy, 98 103-25.

Bentzen, J. & Engsted, T. (2001). A Revival of the Autoregressive Distributed Lag Model in Estimating Energy Demand Relationships. Energy Policy, 26(1), 45–55.

Beyene, B. M. (2011).The Effect of International Remittances on Poverty and Inequality in Ethiopia.

Boone, P. (1994). The Impact of Foreign Aid on Savings and Growth. Center Economic Performance. London School of Economics.

Chami, R, Fullenkamp, C and Jahjah, S. (2003), “Are Immigrant Remittance Flows a Source of Capital for Development?” IMF Working Paper No. 03-189.

Chenery, H. B. & A. Strout (1966). Foreign Assistance and Economic Development. American Economic Review, 56, 679-733.

Collier, Paul. (2000). Economic Causes of Civil Conflict and their Implications for Policy. World Bank, Washington, D.C.

Davis, J. & Carr, D. L. (2010). The Effects of Migrant Remittances on Consumption in Highland Guatemala.

Dejene Aredo (2005): Migrant remittances, shocks And poverty in urban ethiopia: An analysis of Micro Level Panel Data. Addis Ababa University, Ethiopia.

Edwards, T. (2010). Do Remittances Promote More Economic Growth than Foreign Aid in Latin American and Caribbean Countries? . 40.

Enders, W. (1996). Applied Econometric Time Series. Iowa State University: John Wiley and Sons, Inc.

Fayissa, B. (2008). The Impact of Remittances on Economic Growth and Development in Africa.

FDRE, (2013). Diaspora Policy. Addis Ababa Ethiopia.

Gujarati, D. (2004). Basic Econometrics. Fourth Edition. McGraw-Hill Companies.

Haas, H. D. (2007). Remittances, Migration and Social Development. United Nations Research Institute for Social Development, 34.

Johansen, S. (1991). Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian vector Autoregressive Models. Econometrica , 1551-1580.

Kapur, D. (2004) "Remittances: The New Development Mantra?" in: UN Conference on Trade and Development, United Nations, Geneva.

Karagoz, K. (2009). Workers’ Remittances and Economic Growth: Evidence from Turkey Yasar University, 4(13).

Learnmore Muchemwa (2012). The Effects of Remittance on Economic Growth of Sub-Saharan Africa. 99.

Levy, V. (1987). Aid and Economic Growth in the Sub-Saharan: Africa: The Recent Experience. European Economic Review, 32, 1777-1795.

Lucas, R. E. (1988). On Mechanics of Economic Growth. Journal of

Narayan, P. K. (2005). The Saving and Investment Nexus for China: Evidence from Co-itegrationtests. Applied Economics, 37(17), 1979–1990.

Odhiambo, N. M. (2009). Energy Consumption and Economic Growth in Tanzania: An ARDL Bounds Testing Approach. Energy Policy, 37(2), 617–622.

Papanek, G. (1973). Aid, Foreign Private Investment, Savings, and Growth in Less Developing Countries. Journal of Political Economy, 81, 120-130.

Pesaran, M. H. (1997). The Role of Economic Theory in Modeling the Long Run. The Economics Journal, 107, 178–191.

Pesaran, M. H., Y.Shin & Smith, R. J. (2001). Bounds Testing Approaches to The Analysis of Level Relationships. Journal of Applied Econometrics, 16, 289–326.

Ratha, D. (2005). Workers’ Remittances: An Important and Stable Source of External Development Finance. 9, 20.

Ratha, Dilip (2007): Leveraging Remittances for Development. Policy Brief, June. Migration Policy Institute. Washington D.C.

Ratha, dilip (2013): The Impact of Remittances on Economic Growth and Poverty Reduction. Migration Policy Institute. Washington, DC.

Romer, P. (1986). Increasing Returns and Long-Run Growth. Journal of

Schultz, T. W. (1980). The Economics of Being Poor. Journal of political Economy, 639-651.

Solomon, J. (2012). Ethiopia Migration Profile. School of Global Affairs and Public Policy Center for Migration and Refugee Studies, 9.

Sørensen, N.N.., Van Hear, N., and Engberg-Pederson, P. (2002). The MigrationDevelopment Nexus:Evidence and Policy Options, Geneva, IOM.

Stahl, C. W. & Arnold, F. (1986). Overseas Workers' Remittances in Asian Development. International Migration Review, 20, 899-925.

World Bank (2005). Remittances. Washington, DC, The World Bank, 1818 H Street, NW, Washington, DC 20433.

World Bank 2013. Migration and Development Brief. In: Migration and Remittances Unit, D. P. G. (ed.). USA Washington DC.

World Bank (2014). Migration and Development Brief. In: Migration and Remittances Unit, D. P. G. (ed.). USA Washington DC.


Refbacks

  • There are currently no refbacks.




Editorial Office:

Educational Research Multimedia & Publications,
S.N. 21, Plot No 24, Mirza Ghalib Road Malegaon Nasik,
Maharashtra India - 423203.
+919764558895 (whatsapp),
editor@scholarshub.net, www.scholarshub.net

Copyrights © 2010-2020 - ERM Publications, India     

This work is licensed under https://creativecommons.org/licenses/by-sa/4.0/