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Do Remittances Promote Economic Growth and Reduce Poverty? Evidence from Latin American Countries

1
College of Business and Entrepreneurship, Bethune-Cookman University, Daytona Beach, FL 32114, USA
2
IQS School of Management, Universitat Ramon Llull, Via Augusta, 390, 08017 Barcelona, Spain
*
Author to whom correspondence should be addressed.
Economies 2020, 8(2), 35; https://doi.org/10.3390/economies8020035
Received: 16 December 2019 / Revised: 15 April 2020 / Accepted: 16 April 2020 / Published: 1 May 2020
In this study, we explore the hypotheses that (a) workers’ remittances enhance economic growth in Latin American countries, and (b) workers’ remittances help reduce poverty in Latin American countries. In recent decades, workers’ remittances have become an important source of income for many developing countries and, as a global aggregate, workers’ remittances are the largest source of foreign financing after foreign direct investment. This paper analyzes the effects of workers’ remittances on economic growth and poverty in 21 Latin American countries. The study uses annual data covering all Latin American countries for the period 1980–2018. We employ panel least squares and panel fully-modified least squares (FMOLS) methods. In addition, we estimate the short-run and long-run effects of workers’ remittances on economic growth and poverty on individual countries with the Autoregressive Distributed Lag (ARDL-ECM) approach to co-integration analysis. The results reveal that workers’ remittances have a positive effect on long-run economic growth in the majority of the countries studied, but have mixed effects in the short-run. They also suggest that workers’ remittances tend to lower poverty rates in Latin America. View Full-Text
Keywords: remittances; economic growth; poverty; Latin America; ARDL; FMOLS remittances; economic growth; poverty; Latin America; ARDL; FMOLS
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MDPI and ACS Style

Ekanayake, E.M.; Moslares, C. Do Remittances Promote Economic Growth and Reduce Poverty? Evidence from Latin American Countries. Economies 2020, 8, 35. https://doi.org/10.3390/economies8020035

AMA Style

Ekanayake EM, Moslares C. Do Remittances Promote Economic Growth and Reduce Poverty? Evidence from Latin American Countries. Economies. 2020; 8(2):35. https://doi.org/10.3390/economies8020035

Chicago/Turabian Style

Ekanayake, E. M.; Moslares, Carlos. 2020. "Do Remittances Promote Economic Growth and Reduce Poverty? Evidence from Latin American Countries" Economies 8, no. 2: 35. https://doi.org/10.3390/economies8020035

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