Workers’ Remittances in Yemen: Macroeconomic Determinants and Impact on Economic Growth

Alhannom, Essa; Mushabeb, Ghaleb

مجلة بحوث الإدارة والاقتصاد
Volume 3, Numéro 2, Pages 41-62
2021-09-01

Workers’ Remittances In Yemen: Macroeconomic Determinants And Impact On Economic Growth

Authors : Alhannom Essa . Mushabeb Ghaleb .

Abstract

This study aims at examining the determinants of workers’ remittances and their impact on economic growth in Yemen. Autoregressive Distributed Lag (ARDL) bounds test to co-integration and error correction model (ECM) were applied on data covering the period from 1990 to 2014. According to the model of remittances determinants, workers’ remittances in Yemen respond to the macroeconomic conditions of both the home and host countries. It is found that, in the long run, migrant stock and income level at the host countries are positively and strongly influence remittances level, with a feeble impact of domestic inflation rates. The effect of home country’s income seems to be positive but insignificant in explaining the behavior of remittances level. The model of economic growth suggests that, in the long run, the impact of workers’ remittances appears to be positive and moderate with positive and stronger influences observed for financial development and official development assistance. Accordingly, it is recommended that a lesser weight should be given to remittances in the strategic planning process, taking into consideration the increasing potentials of the conditions in the neighboring host countries to be changed. In addition, using remittances as a means of economic growth can be enhanced via encouraging migrants to direct their savings towards productive investment activities, and via formal channels.