Are Immigrant Remittance Flows a Source of Capital for Development?

Author/Editor:

Samir Jahjah ; Ralph Chami ; Connel Fullenkamp

Publication Date:

September 1, 2003

Electronic Access:

Free Full text (PDF file size is 1381 KB).Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

The role of remittances in development and economic growth is not well understood. This is partly because the literatures on the causes and effects of remittances remain separate. We develop a framework that links the motivation for remittances with their effect on economic activity. Because remittances take place under asymmetric information and economic uncertainty, there exists a significant moral hazard problem. The implication is that remittances have a negative effect on economic growth. We test this prediction using panel methods on a large sample of countries. The results indicate that remittances do have a negative effect on economic growth, which indicates that the moral hazard problem in remittances is severe.

Series:

Working Paper No. 03/189

Subject:

English

Publication Date:

September 1, 2003

ISBN/ISSN:

9781451859638/1018-5941

Stock No:

WPIEA1892003

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

47

Please address any questions about this title to publications@imf.org