Personal Remittances and Financial Development for Economic Growth in Economic Transition Countries

Abstract

This study investigates the effect of personal remittance inflows and financial development on the economic growth of 29 economic transition countries for the period of 2000–2015. Dynamic panel system GMM estimation results show that there is a positive relationship between remittance inflows and economic growth. It also shows that remittances and the level of financial development have a substitute relationship in promoting economic growth. So the remittance inflows have a positive effect on economic growth for the countries with low levels of financial development, but they have a negative effect on such growth for countries with moderate to high levels of financial development. © 2020 Korea International Economic Association.