Are Immigrant Remittance Flows a Source of Capital for Development?

By R. Chami, C. Fullenkamp, S. Jahjah. Social Science Research Network, 2003

1,630 citations recorded by the source corpus.

There is a general presumption in the literature and among policymakers that immigrant remittances play the same role in economic development as foreign direct investment and other capital flows, but this is an open question. We develop a model of remittances based on the economics of the family that implies that remittances are not profit-driven, but are compensatory transfers, and should have a negative correlation with GDP growth. This is in contrast to the positive correlation of profit-driven capital flows with GDP growth. We test this implication of our model using a new panel data set on remittances and find a robust negative correlation between remittances and GDP growth. This indicates that remittances may not be intended to serve as a source of capital for economic development.

Subfields: Demography, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/6c7fb70075d8935570ce0ecb7586497148e3ca8d

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Citations in the corpus

Why Don't Remittances Appear to Affect Growth? (2014, neutral): “A second specification problem is that many of these studies control for overall investment (Chami et al. 2005; Giuliano and Ruiz-Arranz 2009; Singh et al. 2011).”
Determinants and Macroeconomic Impact of Remittances in Sub-Saharan Africa (2009, neutral): “For instance, compensation of employees was excluded from total remittances for Cape Verde, 5 The sample include therefore 17 more SSA countries than the dataset used by Guiliano and Ruiz-Arranz (2005).”
Remittances, financial development and economic growth in Africa (2012, methodology): “This is based on the evidence in the literature (see Chami et al., 2003; Catrinescu, Leon-Ledesma, Piracha, & Quillin, 2008); and Faini (2007) where it is shown that the possibility of causality between remittances and growth may affect the reliability of the estimated coefficients. The possibility ”
The Macroeconomic Consequences of Remittances (2012, background): “[15] and Frankel [16]), others of self-interest remittances (Barajas et al.”
Remittances flow and financial development in Bangladesh (2011, background): “Chami et al. (2003) rather find a negative effect of remittances on economic growth as it reduces the incentive to work by the migrant family members.”