Remittances and Institutions: Are Remittances a Curse?

Yasser Abdih, Ralph Chami, Jihad Dagher and Peter Montiel

World Development, 2012, vol. 40, issue 4, 657-666

Abstract: This paper addresses the complex and overlooked relationship between the receipt of workers’ remittances and institutional quality in the recipient country. Using a simple model, we show how an increase in remittance inflows can lead to deterioration of institutional quality—specifically, to an increase in the share of funds diverted by the government for its own purposes. In a cross section of 111 countries we empirically verify this proposition and find that a higher ratio of remittances to GDP leads to lower indices of control of corruption, government effectiveness, and rule of law, even after controlling for potential reverse causality.

Keywords: remittances; institutions; corruption (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (133)

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Related works:
Working Paper: Remittances and Institutions: Are Remittances a Curse? (2010)
Working Paper: Remittances and Institutions: Are Remittances a Curse? (2010)
Working Paper: Remittances and Institutions: Are Remittances a Curse? (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:40:y:2012:i:4:p:657-666

DOI: 10.1016/j.worlddev.2011.09.014

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