Migrants' Remittances, Governance and Heterogeneity

Effiong, Ekpeno L. and Asuquo, Emmanuel E. (2016): Migrants' Remittances, Governance and Heterogeneity.

Abstract

This paper investigates the effect of governance on remittances with specific focus on accounting for heterogeneity in the relationship. Using nonparametric kernel methods that are robust to arbitrary forms of non-linearity, heterogeneity and model specification, and six governance measures from the World Governance Indicators (WGI), the relationship is analysed for 109 countries for the period 1996--2014. The findings show that all six measures: voice and accountability, political stability, government effectiveness, regulatory quality, rule of law and control of corruption are significantly related with remittances. Moreover, the relationship is highly nonlinear and heterogeneous across countries or regions, and time. In addition, specific aspects of governance quality matter differently for remittances across each regional groupings. Hence, there is the need for country-specific rather than a one-size fits all governance reform agenda.

• Item Type: MPRA Paper
• Language: English
• Keywords: Remittances; Governance; Heterogeneity; Nonparametric methods
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C14 - Semiparametric and Nonparametric Methods: General; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources ; Human Development ; Income Distribution ; Migration; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O57 - Comparative Studies of Countries

References

Abdih, Y., Chami, R., Dagher, J., and Montiel, P. (2012). Remittances and institutions: Are remittances a curse? World Development, 40(4):657-666.

Acosta, P., Lartey, E., and Mandelman, F. (2009). Remittances and Dutch disease. Journal of International Economics, 79:102-116.

Adams, R. H. (2009). The determinants of international remittances in Developing countries. World Development, 37(1):93-103.

Aggarwal, R., Demirg¨u¸c-Kunt, A., and Per´ıa, M. S. M. (2011). Do remittances promote financial development? Journal of Development Economics,96:255-264.

Aggarwal, R. and Horowitz, A. (2002). Are international remittances atruism or insurance? evidence from Guyana using multiple-migrant households. World Development, 30(11):2033-2044.

Berdiev, A. N., Kim, Y., and Chang, C.-P. (2013). Remittances and corruption. Economic Letters, 118:182-185.

Bettin, G., Lucchetti, R., and Zazzaro, A. (2012). Endogeneity and sample selection in a model for remittances. Journal of Development Economics, 9(2):370-384.

Brock, W. and Durlauf, S. N. (2001). Growth economics and reality. World Bank Economic Review, 15(2):229-272.

Catrinescu, N., Leon-Ledesma, M., Piracha, M., and Quillin, B. (2009). Remittances, institutions and economic growth. World Development, 37(1):81-92.

Chami, R., Fullenkamp, C., and Jahjah, S. (2003). Are migrant remittance flows a source of capital for development? IMF Working Paper 03/189, International Monetary Fund,Washington DC.

Czekaj, T. and Henningsen, A. (2013). Panel data specifications in nonparametric kernel regression: An application to production functions. IFRO Working Paper 2013/5, Department of Food and Resource Economics, University of Copenhagen.

Durlauf, S. N., Johnson, P. A., and Temple, J. R. (2005). Growth econometrics. In P. Aghion and S. N. Durlauf (Eds.), Handbook of Economic Growth (Vol. 1, p. 555-677),Elsevier.

Effiong, E. L. (2015). Financial development, institutions and economic growth: evidence from Sub-Saharan Africa. Munich Personal RePEc Archive Paper No. 66085.

El-Sakka, M. I. T. and McNabb, R. (1999). The macroeconomic determinants of emigrant remittances. World Development, 27(8):1493-1502.

Faini, R. (1994). Workers remittances and the real exchange rate: A quantitative framework. Journal of Population Economics, 7:235-245.

Freund, C. and Spatafora, N. (2008). Remittances, transaction costs, and informality. Journal of Development Economics, 86(2):356-366.

Giuliano, P. and Ruiz-Arranz, M. (2009). Remittances, financial development and growth. Journal of Development Economics, 90:144-152.

Gupta, S., Patillo, C. A., and Wagh, S. (2009). Effects of remittances on poverty and financial development in Sub-Saharan Africa. World Development, 37(1):104-115.

Hall, P., Li, Q., and Racine, J. (2007). Nonparametric estimation of regressors function in the presence of irrelevant regressors. Review of Economics and Statistics, 89:784-789.

Hayfield, T. and Racine, J. S. (2008). Nonparametric econometrics: The np package. Journal of Statistical Software, 27(5):1-32.

Henderson, D. J., Kumbhakar, S. C., and Parmeter, C. F. (2012). A simple method to visualize results in nonlinear regression models. Economics Letters, 117:578-581.

Henderson, D. J., Papageorgiou, C., and Parmeter, C. F. (2013). Who benefits from financial development? new methods and new evidence. European Economic Review, 63:47-67.

Henderson, D. J. and Parmeter, C. P. (2015). Applied Nonparametric Econometrics. Cambridge University Press, New York.

Huynh, K. P. and Jacho-Ch´avez, D. T. (2007). Conditional density estimation: an application to the Ecuadorian manufacturing sector. Economics Bulletin, 3(62):1-6.

Huynh, K. P. and Jacho-Ch´avez, D. T. (2009). Growth and governance: A nonparametric analysis. Journal of Comparative Economics, 37:121-143.

IMF (2005). World Economic Outlook 2005. International Monetary Fund, Washington.

Kaufmann, D., Kraay, A., and Mastruzzi, M. (2006). Governance matters VI: Governance indicators for 1996-2006. World Bank Policy Research Working Paper No. 4280.

Lartey, E. K. and Mengova, E. (2016). Does institutional quality in Developing countries affect remittances? Journal of Developing Areas, 50(1):59-76.

Li, Q. and Racine, J. S. (2007). Nonparametric Econometrics: Theory and Practice. Princeton University Press, Princeton, NJ.

Lucas, R. E. B. and Stark, O. (1985). Motivations to remit: evidence from Bostwana. Journal of Political Economy, 93(5):901-918.

Newey, W., Powell, J., and Vella, F. (1999). Nonparametric techniques of triangular simultaneous equation models. Econometrica, 67:565-603.

Racine, J., Hart, J., and Li, Q. (2006). Testing the significance of categorical predictor variables in nonparametric regression models. Econometric Reviews, 25:523-544.

Racine, J. S. (2008). Nonparametric econometrics: a primer. Foundation and Trends in Econometrics, 3(1):1-88.

Racine, J. S. and Li, Q. (2004). Nonparametric estimation of regression functions with both both categorical and continuous data. Journal of Econometrics, 119:99-130.

Rapoport, H. and Docquier, F. (2006). The economics of migrants’ remittances. In Kolm, S.-C. and Ythier, J. M., editors, Handbook of the Economics of Giving, Altruism and Reciprocity, volume 2, pages 1135-1198. Elsevier.

Singh, R. J., Haacker, M., Lee, K. W., and Goff, M. L. (2010). Determinants and macroeconomic impact of remittances in Sub-Saharan Africa. Journal of African Economies, 20(2):312-340.

Sperlich, S. (2009). A note on non-parametric estimation with predicted variables. Econometrics Journal, 12(2):382-395.

World Bank (2015). Migration and Remittances: Recent developments and outlook. Migration and Development Brief 25, World Bank