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Are Immigrant Remittance Flows a Source of Capital for Development
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TL;DR: In this paper, the authors developed a framework that links the motivation for remittances with their effect on economic activity and showed that remittance has a negative effect on the economic growth.
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Abstract: The role of remittances in development and economic growth is not well understood. This is partly because the literatures on the causes and effects of remittances remain separate. We develop a framework that links the motivation for remittances with their effect on economic activity. Because remittances take place under asymmetric information and economic uncertainty, there exists a significant moral hazard problem. The implication is that remittances have a negative effect on economic growth. We test this prediction using panel methods on a large sample of countries. The results indicate that remittances do have a negative effect on economic growth, which indicates that the moral hazard problem in remittances is severe.
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Citations
Los efectos de la migración internacional en las condiciones de vida de los hogares colombianos
Luis Miguel Tovar Cuevas,Juan Sebastián Vélez Velásquez +1 more
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Comparative analysis, cash transfers, household investment and inequality reduction in Togo
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Revisiting the Brain Drain Literature with Insights from a Dynamic General Equilibrium World Model
TL;DR: In this paper, a dynamic general equilibrium world model was used to identify the mechanisms that can generate larger economic impacts at the aggregate, and the analysis was based on a dynamic GEM model calibrated to published statistics.
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Follow the Money: Remittance Responses to FDI Inflows
Michael Coon,Rebecca Neumann +1 more
TL;DR: This paper explored the relationship between foreign direct investment and remittance flows using a panel of 79 countries and found a positive and significant relationship between the two capital flows, indicating a desire among the emigrant community to invest their income earned abroad in their home countries.
Brain Drain, Brain Circulation, Remittances and Development Prospects for the Caribbean
TL;DR: In this article, the authors examine the evolution of the debate and key issues with particular attention to the implications for small, developing states within CARICOM, and conclude that remittances alone are not sufficient for economic development and are, in fact, a reverse subsidy to wealthier countries.
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