Title: Macroeconomic significance of remittances in developing countries

Authors: Syden Mishi; Forget Mingiri Kapingura

Addresses: Department of Economics, University of Fort Hare, East London Campus, P.O. Box 7426, 50 Church Street, East London, South Africa ' Department of Economics, University of Fort Hare, East London Campus, P.O. Box 7426, 50 Church Street, East London, South Africa

Abstract: Globalisation has resulted in financialisation, which is the free flow of funds across borders. Because of the global financial crisis and the European debt crisis, there has been a decrease in the volume of external funds to developing countries. This has left remittances as one of the major sources of finance for growth in developing countries. The study investigated the macroeconomic effects of remittances in developing countries. Utilising panel study techniques, the study analysed yearly data of 22 countries covering the period, 1960-2010. Empirical evidence suggests that remittances diminish macroeconomic volatility mainly in receiving developing countries, presumably through smoothening aggregate consumption. The analysis further revealed that remittances do not have uniform macroeconomic effects from country to country or across time.

Keywords: remittances; globalisation; financialisation; macroeconomics; investment; macroeconomic volatility; developing countries; external funds.

DOI: 10.1504/IJEPEE.2013.056929

International Journal of Economic Policy in Emerging Economies, 2013 Vol.6 No.3, pp.238 - 253

Received: 21 Jan 2013
Accepted: 02 Apr 2013
Published online: 28 Jun 2014 *

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