The Impact of Migrant Remittances on Economic Growth in Arab Countries

Abstract

The potential role that workers’ remittances are likely to play in promoting economic growth, especially in Arab countries, is currently attracting considerable attention. These remittances have an impact on the remitting economies as well. The Gulf region is considered one of the top sending countries of migrant remittances. In this study, empirical analysis is carried out with panel techniques using data over the last three decades for six Arab countries. Our results show that migrant remittances have a positive and significant impact on economic growth. This relationship is also significant when we use dynamic panel data. An indirect effect of remittances on economic growth is pointed out especially via the investment and the household final consumption expenditure channels.

Policymakers in Arab countries should take appropriate policy actions to increase the outflow of workers. Developed capital markets, as well as a sound macroeconomic policy environment, would provide incentives for sustainable remittances transfers.