PhD Defence: Muhammad Naseem

Naseem Muhammad
CERDI, UCA, CNRS, IRD

The Role of FDI and Migrant Remittances in Economic Growth: An Empirical Analysis

Composition du jury 

Jean-Louis Combes, Professor, Université Clermont Auvergne
Mary-Francoise Renard, Professor,  Université Clermont auvergne
Nicolas Peridy, Professor, Université de Toulon
Catherine Bros, Professor, Université de Tours
Marion Dovis, Professor, Aix Marseille Université

Abstract

This thesis contributes to the literature on the impact of external financial inflows on economic growth. Chapter 2 studies the impact of FDI and migrant remittances on economic growth in a sample of developing countries to empirically explore the combined impact of remittances and FDI on economic growth. Additionally, identifying transmission channels through which they can impact economic growth. In this respect, we investigate the impact of FDI and migrant remittances on economic growth and introduce the interaction of FDI and remittances. Moreover, total factor productivity (TFP) is used as a transmission channel to investigate productivity growth in recipient economies. The increase in TFP can result from technology spillovers from foreign companies that bring in advanced production techniques and knowledge, which can enhance the productive capacity of domestic firms. At the same time, remittances can influence TFP through their effects on investment in physical and human capital and innovation in recipient countries. Therefore, TFP is a helpful transmission channel to analyze the impact of FDI and remittances on economic growth in developing countries. By doing so, a more comprehensive understanding of how FDI and remittances affect economic growth in developing countries can be achieved. These results indicate a strong complementarity between these two financial inflows in promoting productivity growth in recipient economies. In other words, when FDI and migrant remittances work together, they have a significantly more positive impact on TFP than when they work separately.
Chapter 3 draws on the role of remittances on economic complexity to help improve understanding of the economic effects of remittances and inform policies and interventions aimed at leveraging remittances to promote economic transformation and diversification. The empirical analysis reveals that the interaction of remittances and education is positively associated with economic complexity. Specifically, we find that the positive effect of migrant remittances on economic complexity is amplified in the presence of higher education levels. These findings suggest that while migrant remittances may not necessarily lead to economic complexity on their own, they can contribute to it when combined with higher levels of education. Our study sheds light on the potential role of education in maximizing the positive impact of remittances on economic development. The results of this study carry significant implications for policymakers and highlight the need for a more nuanced approach to understanding the impact of remittances on economic development.
Chapter 4 analyzes the role of sectoral-level greenfield FDI on economic growth in developing and developed economies. In our analysis, we use the data of greenfield FDI at aggregated and sector-level to check their impact on economic growth. Using 2SLS regression analysis, we find that the overall impact of greenfield FDI on economic growth is positive and statistically significant. Moreover, at the sector level, the manufacturing sector is the main driver in stimulating the economy. The positive impact of manufacturing greenfield FDI on economic growth can be attributed to various factors, such as the transfer of technology, increased competition, job creation, and increased productivity. These factors can help to spur innovation, enhance efficiency, and ultimately increase output in the manufacturing sector. A key policy implication of our findings is that greenfield FDI directed towards the manufacturing sector is more helpful in bringing economic development and increasing overall welfare. Although, a favorable political and social environment is required for productive investment. Moreover, a well-developed institutional framework and enabling environment are necessary to ripe the benefits of FDI.

Keywords

FDI,Growth,Remittances.

www.theses.fr/en/s363436