Are Immigrant Remittance Flows a Source of Capital for Development?
Author | : Mr.Ralph Chami |
Publisher | : International Monetary Fund |
Total Pages | : 49 |
Release | : 2003-09-01 |
ISBN-10 | : 9781451859638 |
ISBN-13 | : 1451859635 |
Rating | : 4/5 (38 Downloads) |
Download or read book Are Immigrant Remittance Flows a Source of Capital for Development? written by Mr.Ralph Chami and published by International Monetary Fund. This book was released on 2003-09-01 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.