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Are Immigrant Remittance Flows a Source of Capital for Development? Ralph Chami, Connel Fullenkamp, and Samir Jahjah Full Text of this Article (PDF 140K) Abstract: 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. |
