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2018•Applied Economics QuarterlyOpen access

Are There Significant Externality Effects of Remittances in Asian Economic Growth?

Gazi Mainul Hassan, Shamim Shakur

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Abstract

Abstract This article estimates the externality effects of remittances in a sample of Asian countries. According to Romer (1986) externality generated by education sector can raise nationwide productivity. Because a significant portion of remittances income is invested on education, remittances stock can also generate such externalities. Using a Romer type production function and with the aid of panel cointegration technique applied to the data, we find evidence in favour of a highly significant externality effects of remittances, although these estimates are small in magnitude. JEL classifications: F24; F43; O11; O15 Keywords: Remittances; Externality Effects; Endogenous Growth; Panel Cointegration, group-mean panel dynamic OLS

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Abstract This article estimates the externality effects of remittances in a sample of Asian countries. According to Romer (1986) externality generated by education sector can raise nationwide productivity. Because a significant portion of remittances income is invested on education, remittances stock can also generate such externalities. Using a Romer type production function and with the aid of panel cointegration technique applied to the data, we find evidence in favour of a highly significant externality effects of remittances, although these estimates are small in magnitude. JEL classifications: F24; F43; O11; O15 Keywords: Remittances; Externality Effects; Endogenous Growth; Panel Cointegration, group-mean panel dynamic OLS

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Available abstract

Abstract This article estimates the externality effects of remittances in a sample of Asian countries. According to Romer (1986) externality generated by education sector can raise nationwide productivity. Because a significant portion of remittances income is invested on education, remittances stock can also generate such externalities. Using a Romer type production function and with the aid of panel cointegration technique applied to the data, we find evidence in favour of a highly significant externality effects of remittances, although these estimates are small in magnitude. JEL classifications: F24; F43; O11; O15 Keywords: Remittances; Externality Effects; Endogenous Growth; Panel Cointegration, group-mean panel dynamic OLS

Key concepts: Romer, Externality, Economics, Cointegration, Productivity, Stock (firearms), Production (economics), Macroeconomics

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