Remittances, FDI and economic growth: the case of South-East European countries

Journal
Post-Communist Economies
Date Issued
2023-01
Author(s)
DOI
10.1080/14631377.2023.2169520
Abstract
South-East European countries rely heavily on remittances and FDI
as external sources of financing. Hence, an investigation of the
behaviour of remittances and FDI during the business cycle and
their impact on economic growth is of crucial importance. To
achieve this objective, we first analyse the cyclical nature of remittances and FDI flows in Albania, Bosnia and Herzegovina, Croatia,
Montenegro, the Republic of North Macedonia, and Serbia (SEE6)
during their business cycles in the 2008q1-2021q2 period. Second,
we investigate the causal link among these variables, and find out
that although at the aggregate level remittances and FDI move
synchronously and in the same direction as the business cycle,
there are considerable variations across countries. Following
Dumitrescu-Hurlin Panel Granger causality test, we find that for
most SEE6 there is a bidirectional causal relationship between
remittances and economic growth, i.e. economic growth is caused
by remittances, and GDP growth also stimulates remittances.
Subjects

Remittances; foreign ...

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