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Remittances, FDI, and Economic Growth in South Asia: Evidence from Panel Data - Rimesse di denaro, Investimenti Diretti Esteri e crescita economica in Sud Asia: evidenze da dati panel

Kamal Upadhyaya (), Dharmendra Dhakal () and Samanta Thapa ()
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Samanta Thapa: Department of Finance, Western Kentucky University, Postal: 1906 College Heights Blvd, Bowling Green, KY 42101, USA, http://www.wku.edu/

Economia Internazionale / International Economics, 2013, vol. 66, issue 4, 533-545

Abstract: This paper estimates the effect of FDI and remittances on economic growth in South Asia using an aggregate production function model. Time series data from 1976 to 2010 for India, Pakistan, Bangladesh and Sri Lanka is used to create the panel data. Time series properties of the panel data are diagnosed using panel unit root and panel cointegration tests and an error correction model is developed. The model is estimated using fixed effects estimator. The findings suggest that FDI has a positive effect on economic growth but remittances have a negative effect. A decrease in exports due to the Dutch Disease, a decrease in the labor force participation of the remittance receiving family, and public moral hazard problems could be possible reasons for the negative effect of remittances on economic growth. Questo studio stima l’effetto degli Investimenti Diretti Esteri e delle rimesse di denaro sulla crescita economica in Sud Asia utilizzando un modello di funzione di produzione aggregata con serie di dati panel del periodo 1976-2010 relativi a India, Pakistan, Bangladesh e Sri Lanka. Le proprietà dei dati di serie temporali sono analizzate tramite test di radice unitaria e di cointegrazione e viene sviluppato un modello error correction, per la stima del quale si utilizza uno stimatore a effetti fissi. I risultati suggeriscono che solo gli Investimenti Diretti Esteri hanno un effetto positivo sulla crescita economica. Una diminuzione nell’export dovuta al “morbo dell’olandese”, una diminuzione nella partecipazione alla forza lavoro delle famiglie che ricevono rimesse e il problema dell’azzardo morale possono essere le ragioni dell’effetto negativo di queste ultime sulla crescita economica.

Keywords: FDI; Remittances; South Asia; Panel Data; Error Correction Model (search for similar items in EconPapers)
JEL-codes: D20 F22 F30 (search for similar items in EconPapers)
Date: 2013
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