Workers’ remittances and economic growth in China and Korea: an empirical analysis

Jawaid, Syed Tehseen and Raza, Syed Ali (2012): Workers’ remittances and economic growth in China and Korea: an empirical analysis.

Abstract

This study investigates the relationship between workers’ remittances and economic growth in China and Korea by employing time series data from period of 1980 to 2009. Cointegration results confirm that there exist significant positive long run relationship between remittances and economic growth in Korea, while, significant negative relationship exist between remittances and economic growth in China. Error correction model confirms the significant positive short run relationship of workers’ remittances with economic growth in Korea while, the results of China were insignificant in short run. Causality analysis confirms unidirectional causality runs from workers’ remittances to economic growth in both China and Korea. Sensitivity analysis confirms that the results are robust. It is suggested that Korea should form friendly policy to ensure the continuous inflows of workers’ remittances and their efficient utilization to ensure economic growth. On the other hand, China should keep an eye to reduce voluntary unemployment leads to decrease in productivity and growth in the country.

• Item Type: MPRA Paper
• Language: English
• Keywords: Remittances, Open Economy, Economic Growth
• Subjects: F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F41 - Open Economy Macroeconomics; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies; F - International Economics > F2 - International Factor Movements and International Business > F24 - Remittances

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