Remittances and Institutions: Are Remittances a Curse?

Yasser Abdih, Jihad Dagher and Peter Montiel
Additional contact information
Yasser Abdih: International Monetary Fund, http://www.imf.org/external/index.htm
Authors registered in the RePEc Author Service: Ralph Chami

No 2010-08, Center for Development Economics from Department of Economics, Williams College

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)
JEL-codes: D02 D64 F02 F22 F24 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2010-07
New Economics Papers: this item is included in nep-mig
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Remittances and Institutions: Are Remittances a Curse? (2012)
Working Paper: Remittances and Institutions: Are Remittances a Curse? (2010)
Working Paper: Remittances and Institutions: Are Remittances a Curse? (2008)
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