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The Impact of Remittances on the Economic Growth of Developing Countries: A Literature Review
Mälardalen University, School of Business, Society and Engineering. (Ariam Beiene Mebrahtu, Lucas Waldem Zanforlini)
2018 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

Firms, financial institutions and governments have been the main source for international

financial flows to developing countries. Moreover, from the late 1990s remittances sent from

migrants abroad to their home countries became a vital source of income as they exceed

official development assistance or aids.

Our interest concerns on how remittances affect economic growth in developing countries.

However, we have come across considerable contradictory findings regarding the positive or

negative contribution of remittances to a sustainable economic development.

A main obstacle in detecting the effect on economic growth is due to the problem of

measuring the real financial flows across countries and to the informal channels migrants use

to send money.

Unlike many studies, which are based on empirical method, this paper is based on a literature

review as we are interested in a broader overview of the subject.

Comparing various findings, we conclude that remittances contribute positively to economic

growth.

The level of contribution is based on how remittance receiving families use the inflows of

money inflows. Both physical and human investment have a larger impact on the economic

growth in a long-term perspective, while direct consumption on primary goods activate a

multiplier effect of aggregate demand which results beneficial to the entire economy.

Particularly attention is dedicated to the need of policy interventions to optimize the positive

impact of remittances and prevent their possible bad side effects.

Place, publisher, year, edition, pages
2018.
National Category
Economics
Identifiers
URN: urn:nbn:se:mdh:diva-39726OAI: oai:DiVA.org:mdh-39726DiVA, id: diva2:1216182
External cooperation
Ariam Beiene Mebrahtu
Subject / course
Economics
Presentation
2018-05-31, 12:29 (English)
Supervisors
Examiners
Available from: 2018-06-21 Created: 2018-06-11 Last updated: 2018-06-21Bibliographically approved

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