Title: Remittances, FDI and ODA: stability, cyclicality and stabilising impact in developing countries

Authors: Ileana C. Constantinescu; Maurice Schiff

Addresses: Development Economics Research Group, The World Bank, MC3-303, 1818 H Street, NW, Washington, DC 20433, USA ' Institute for the Study of Labor (IZA), Schaumburg-Lippe-Strasse 5-9, 53113 Bonn, Germany

Abstract: Received wisdom that remittances are stable is based on global rather than individual country figures. And findings in a majority of studies that remittances are counter-cyclical are not based on individual country analysis. This paper fills this knowledge gap by examining, for 116 developing countries over three decades (1980-2007), the stability, cyclicality and stabilising impact of remittances (REM), official development aid (ODA) and FDI, obtaining new results. Note that these flows can be both counter-cyclical and destabilising. Findings for a majority of countries, regions and income groups are: 1) ODA is more stable than REM, which is more stable than FDI; 2) ODA is counter-cyclical and REM is pro-cyclical, though less than FDI; 3) ODA is stabilising and REM destabilising, though less than FDI; 4) counter-(pro-)cyclical ODA, REM and FDI flows are destabilising (stabilising) in a substantial number of countries, regions and income groups.

Keywords: remittances; foreign direct investment; FDI; official development aid; ODA; stability; cyclicality; stabilising impact; developing countries.

DOI: 10.1504/IJMRM.2014.059696

International Journal of Migration and Residential Mobility, 2014 Vol.1 No.1, pp.84 - 106

Published online: 21 Jun 2014 *