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Open AccessArticle

Evaluation of the Long-Term Stability and Impact of Remittances and Development Aid on Sustainable Economic Growth in Developing Countries

1
Migration Policy Centre, Robert Schuman Centre for Advanced Studies, European University Institute, I-50133 Florence, Italy
2
Department of Informatics, Faculty of Business and Economics, Mendel University Brno, 61300 Brno, Czech Republic
3
Department of Economics, Faculty of Economics and Administration, Masaryk University, 60200 Brno, Czech Republic
*
Author to whom correspondence should be addressed.
Sustainability 2019, 11(6), 1538; https://doi.org/10.3390/su11061538
Received: 16 January 2019 / Revised: 6 March 2019 / Accepted: 7 March 2019 / Published: 13 March 2019
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Abstract

In our paper, we analyse the long-term stability and impact of remittances and development aid on sustainable economic growth in developing countries. We use two data samples from countries that were recipients of both aid and remittances in the corresponding period. First, unbalanced data from the years 1970 to 2017; that is, how countries appear in the data. Second, balanced data, where we selected the largest possible set of countries for which data exists without gaps from the years 1970–2017. This dataset consists of 57 countries for the period from 1991 to 2017. Using linear regression models, we conclude that up until the end of the 1980s, the size of aid as a share of gross domestic product (GDP) was larger than the share of remittances. After that, the situation changed and the shares of both inflows were broadly similar. The inflow of remittances was more stable than the inflow of aid and development aid did not (on the contrary to remittances) contribute positively to sustainable economic growth if we consider the entire period between 1970 and 2017. Our results suggest that a statistically significant relationship between development aid and economic growth (per capita) may be observed only in the period from 1990 to 1999. Economic growth in developing countries is negatively influenced by the uncertainty related to the flows of official development assistance (ODA) and aid in all investigated decades. In the case of the remittance flows, the increased volatility tends to contribute negatively to sustainable economic growth only when the remittance flows represent a relatively higher share of GDP. View Full-Text
Keywords: remittances; development aid; developing countries; sustainable economic growth; social inequality; migration remittances; development aid; developing countries; sustainable economic growth; social inequality; migration
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MDPI and ACS Style

Stojanov, R.; Němec, D.; Žídek, L. Evaluation of the Long-Term Stability and Impact of Remittances and Development Aid on Sustainable Economic Growth in Developing Countries. Sustainability 2019, 11, 1538.

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