PhD seminar: Muhammad Naseem

Economic Growth, FDI and Migrant Remittance: IdentifyingTransmission Channel

Abstract

This study investigates the impact of FDI and migrant remittances on economic growth both directly andindirectly through transmission channel. In this respect, we use panel of 52 developing countries over theperiod of 1990-2017. We apply generalized methods of moments (GMM) for our empirical analysis. Ourfindings suggest that there is direct link between FDI and economic growth. But, no such a link exists incase of migrant remittances. Furthermore, to check the combined impact of FDI and migrant remittances,we introduce interaction of FDI and migrant remittances. We do not find any significant relation betweeneconomic growth and interaction of FDI and migrant remittances. Additionally, we use total factor productivity(TFP) as transmission channel. We find that TFP and FDI are negatively linked whereas the coefficient ofinteraction of FDI and remittances is not only positive but also statistically significant. The results show strongcomplementarity between FDI and remittances in terms of promoting productivity growth in the recipienteconomies.

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