Critical Review of Impact of Remittances on Domestic Investment: A Panel Study of Six South Asian Countries by Ranjan Kumar Dash

March 21, 2023March 21, 2023 Discipline: Economics

Write a critical review of ‘Impact of Remittances on Domestic Investment: A Panel Study of Six South Asian Countries’

Author: Dash, Ranjan Kumar
Author Affiliation: Symbiosis International U
Source: South Asia Economic Journal, March 2020, v. 21, iss. 1, pp. 7-30
Publication Date: March 2020
Abstract: Remittances inflow to South Asian countries increased significantly and is now one of the major sources of external finance overtaking traditional capital inflows such as foreign direct investment (FDI), foreign portfolio investment (FPI) and aid. However, the role of remittances in economic development has not been examined extensively, particularly for South Asian countries. This article examines the impact of remittances on domestic investment for South Asia over 1991-2017. Advanced panel estimation methods (unit root, cointegration and causality) are employed to account for potential country-specific heterogeneity and the endogeneity problem. Results of this study suggest that remittances increase domestic investment in the short term as well as in the long run for South Asia. This indicates that remittances are used not only for consumption purposes but also for investment activities such as human and physical capital development. The panel causality results suggest the presence of uni-directional causality running from remittances to domestic investment. Therefore, the result of this study supports the theoretical argument and previous empirical studies for other developing countries.
Descriptors: Investment; Capital; Intangible Capital; Capacity (E22); Remittances (F24)
Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance (O16)
International Linkages to Development; Role of International Organizations (O19)
Keywords: Aid; Capital; Developing Countries; Development; Finance; Investment; Remittances
Geographic Descriptors: S. Asia
Geographic Region: Asia
ISSN: 13915614
Publication Type: Journal Article
Availability: http://sae.sagepub.com/content/by/year
Update Code: 20210218
Accession Number: 1882732

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