Main Article Content
Abstract
Purpose ― Drawing on annual data from 1996 to 2022, this study aims to examine the effect of Egypt’s real GDP growth.
Methods ― Autoregressive Distributed Lag (ARDL) and Cointegration technique are applied by first examining the stationarity of the series by utilizing the Augmented-Dicky-Fuller (ADF) unit root test. The bound cointegration test is then implemented to evaluate the existence of cointegration among the variables.
Findings ― The results indicate that the GDP growth rate has a long-run positive relationship with remittance inflows in Egypt. This paper also finds that the average governance indicators in Egypt, which include government effectiveness, political stability, control of corruption and regulatory quality, voice and accountability, and the rule of law, could help facilitate the long-run effect of remittances on GDP growth.
Implication ― The findings imply that maintaining high levels of governance indicators is essential for helping Egypt benefit from remittances and enhancing its economic growth.
Originality/value ― The study is a pioneer in including the average governance indicators in the remittance-growth nexus study for Egypt. Its purpose is to assess whether governance quality affects the nexus and whether there exists a threshold for the average governance indicators below which the flow of remittances does not encourage economic growth.
Keywords
Article Details
Copyright (c) 2024 Abdulrhman Alamoudi
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References
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- Alamoudi, A. M. (2024). Does Control of Corruption Matter in the Nexus between Trade Openness and Economic Development? The Case of Saudi Arabia. Global Journal of Economics and Business, 14(3), 242-250. https://doi.org/10.31559/GJEB2024.14.3.4
- Mohamed, A. A., & Abdi, A. H. (2024). Exploring the dynamics of inflation, unemployment, and economic growth in Somalia: a VECM analysis. Cogent Economics & Finance, 12(1). https://doi.org/10.1080/23322039.2024.2385644
- Acemoglu, D., & Robinson, J. A. (2012). Why Nations Fail: The Origins of Power, Prosperity, and Poverty. New York: Crown Business.
- Adnan, K., Yin, K., Adrian, C. C., Cristina, G. Z., Sun, Q., & Duan, W. (2020). Is the relationship between remittances and economic growth influenced by the governance and development of the financial sector? New evidence from the developing countries. Romanian Journal of Economic Forecasting, 23(1), 37–56.
- Authers, J., & Leatherby L. (2019). As China’s Debt Balloons, Other Emerging Markets Fail to Take Of. https://www.bloomberg.com/graphics/2019-emerging-markets-debt/. Accessed 8 Apr 2020.
- Anetor, F. O. (2019). Remittances and Economic Growth Nexus in Nigeria: Does financial sector development play a critical role?. International Journal of Management, Economics and Social Sciences, 8(2), 116–135. https://doi.org/10.32327/IJMESS/8.2.2019.8
- Alemu, T. A., & Zegeye, M. B. (2024). Empirical investigation on the dynamics effects of population and economic growth in Ethiopia: an application of the VEC model. Cogent Social Sciences, 10(1). https://doi.org/10.1080/23311886.2024.2338861
- Alhassan, U. (2023) E-government and the impact of remittances on new business creation in developing countries. Economic Change Restructuring 56:181–214. https://doi.org/10.1007/s10644-022-09418-z.
- Alfada, A. (2023). The destructive effect of corruption on economic growth in Indonesia: A Threshold model, Heliyon, 5(10). https://doi.org/10.1016/j.heliyon.2019.e02649
- Arbia, A., Sobhi, K., Karim, M., & Eddaou M. (2023). FDI, Information and Communication Technology, and Economic Growth: Empirical Evidence from Morocco. Advances in Management and Applied Economics. 13(6), 1-10. https://doi.org/10.47260/amae/13610.
- Bucevska, V. (2022). Impact of Remittances on Economic Growth: Empirical Evidence from South-East European Countries. South East European Journal of Economics and Business, 17(1), 79-94. https://doi.org/10.2478/jeb-2022-0006.
- Chenery, H.B. (1967). Foreign Assistance and Economic Development. In: Adler, J.H. (eds) Capital Movements and Economic Development. International Economic Association Conference Volumes. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-15238-4_9
- Cazachevici, A., Havranek, T., & Horvath, R. (2020). Remittances and economic growth: A meta-analysis. World Development, 134, Article 105021. https://doi.org/10.1016/j.worlddev.2020.105021
- Chowdhury, M. (2016). Financial Development, Remittances and Economic Growth: Evidence Using a Dynamic Panel Estimation. Margin: The Journal of Applied Economic Research, 10(1), 35–54. https://doi.org/10.1177/0973801015612666
- Dickey, D. A., & Fuller, W. A. (1979). Distribution of the Estimators for Autoregressive Time Series with a Unit Root. Journal of the American Statistical Association, 74(366a), 427–437. https://doi.org/10.1080/01621459.1979.10482531
- Dokas, I., Panagiotidis, M., Papadamou, S., & Spyromitros, E. (2023). Does innovation affect the impact of corruption on economic growth? International evidence. Economic Analysis and Policy, 77(C), 1030-1054. https://doi.org/10.1016/j.eap.2022.12.032
- Engle, R., & Granger, C. (1987). Cointegration and error correction: Representation, estimation and testing. Econometrica, 55(2), 251–276. https://doi.org/10.2307/1913236
- Elsadig, M., & Rahim, K. (2023). FDI inflows spillover effect implications on the Asian‐Pacific labour productivity. International Journal of Finance & Economics, 28(1), 575-588. https://doi.org/10.1002/ijfe.2437. January
- Nkoro, E., & Uko, A. K. (2016). Autoregressive Distributed Lag (ARDL) Cointegration technique: Application and interpretation. Journal of Statistical and Econometric Methods, SCIENPRESS Ltd, 5(4), 1–3.
- Han, X., Khan, H., & Zhuang, J. (2014). Do Governance Indicators Explain Development Performance? A Cross-Country Analysis. Asian Development Bank Economics Working Paper Series No. 417. http://dx.doi.org/10.2139/ssrn.2558894.
- Hansen, B. E. (1999). Threshold effects in non-dynamic panels: Estimation, testing, and inference. Journal of Econometrics, 93(2), 345–368. https://doi.org/10.1016/S0304-4076(99)00025-1.
- Islam, M. S. (2022). Do personal remittances influence economic growth in South Asia? A panel analysis. Review of Development Economics, 26(1), 242–258. https://doi.org/10.1111/rode.12842.
- Imai, K. S., Gaiha, R., Ali, A., & Kaicker, N. (2014). Remittances, growth, and poverty: NEW evidence from Asian countries. Journal of Policy Modeling, 36(3), 524-538. https://doi.org/10.1016/j.jpolmod.2014.01.009
- Johansen, S., & Juselius, K. (1990). Maximum Likelihood Estimation and Inference on Cointegration—With Appucations to The Demand for Money. Oxford bulletin of economics and statistics, 52(2), 169–210. https://doi.org/10.1111/j.1468-0084.1990.mp52002003.x
- Jushi, E., Hysa, E., Cela, A., Panait, M., & Voica, M. C. (2021). Financing growth through remittances and foreign direct investment: Evidence from Balkan countries. Journal of Risk and Financial Management, 14(3), 117. https://doi.org/10.3390/jrfm14030117
- Matuzeviciute, K., & Butkus, M. (2016). Remittances, Development Level, and Long-Run Economic Growth. Economies, 4(28), 1–20. https://doi.org/10.3390/economies4040028.
- Tchekoumi, L. B., & Nya, P. D. (2023) Remittances and economic growth: What lessons for the CEMAC zone?, Cogent Economics & Finance, 11(1). https://doi.org/10.1080/23322039.2023.2191448.
- Menegaki, A. N. (2019). The ARDL Method in the Energy-Growth Nexus Field; Best Implementation Strategies. Economies, 7(4), 105. https://doi.org/10.3390/economies7040105
- Hadush, M., Gebregziabher, K. G., & Biruk, S. (2023). Determinants of economic growth in East African countries: A dynamic panel model approach. Cogent Economics & Finance, 11(2). https://doi.org/10.1080/23322039.2023.2239629
- Olayungbo, D. O., & Quadri, A. (2019). Remittances, financial development and economic growth in sub-Saharan African countries: evidence from a PMG-ARDL approach. Financial Innovation, 5(9). https://doi.org/10.1186/s40854-019-0122-8
- Oteng-Abayie, E., Awuni, P. A., & Adjei, T. K. (2020). The Impact of Inward remittances on Economic growth in Ghana. African Journal of Economic Review, 8(3), 49–65. https://doi.org/10.22004/ag.econ.308775.
- Peterson, E. W. F. (2017). The role of population in economic growth. SAGE Open, 7(4), 2158244017736094. https://doi.org/10.1177/2158244017736094
- Rehman, N. U., Hysa, E., & Poon, W. C. (2021). The effect of financial development and remittances on economic growth. Cogent Economics & Finance, 9(1). https://doi.org/10.1080/23322039.2021.1932060
- Sadiq, K., & Tsourapas, G. (2021). The Postcolonial Migration State, European Journal of International Relations, 27(3). https://doi.org/10.1177/13540661211000114
- Sutradhar, S. R. (2020). The impact of remittances on economic growth in Bangladesh, India, Pakistan, and Sri Lanka. International Journal of Economic Policy Studies, 14, 275–295. https://doi.org/10.1007/s42495-020-00034-1
- Sarker, B., & Khan, F. (2020). Nexus between foreign direct investment and economic growth in Bangladesh: an augmented autoregressive distributed lag bounds testing approach. Financial Innovation, 6(10). https://doi.org/10.1186/s40854-019-0164-y
- Sobiech, I. (2015). Remittances, finance and growth: Does financial development foster remittances and their impact on economic growth?. FIW Working Paper Series, 158. https://hdl.handle.net/10419/121159
- DESA, U. N. (2020). The International Migration report (Highlights). Department of Economic and Social Affairs.
- Ustarz, Y., & Issahaku, H. (2017). International Migrant Remittance and Productivity Growth in Ghana. Ghana Journal of Development Studies, 14(2), 63–82. https://doi.org/10.4314/gjds.v14i2.4
- Yavuz, R. I., & Bahadir, B. (2022). Remittances, ethnic diversity, and entrepreneurship in developing countries. Small Business Economics, 58, 1931–1952. https://doi.org/10.1007/s11187-021-00490-9
- Zohry, A. (2013). Egypt's International Migration after the Revolution: Is There Any Change?. Confluences Méditerranée, 87, 47-54. https://doi.org/10.3917/come.087.0047.
References
Abdulai, A. M. (2023). The impact of remittances on economic growth in Ghana: An ARDL bound test approach. Cogent Economics & Finance, 11(2), 2243189. https://doi.org/10.1080/23322039.2023.2243189.
Alamoudi, A. M. (2024). Does Control of Corruption Matter in the Nexus between Trade Openness and Economic Development? The Case of Saudi Arabia. Global Journal of Economics and Business, 14(3), 242-250. https://doi.org/10.31559/GJEB2024.14.3.4
Mohamed, A. A., & Abdi, A. H. (2024). Exploring the dynamics of inflation, unemployment, and economic growth in Somalia: a VECM analysis. Cogent Economics & Finance, 12(1). https://doi.org/10.1080/23322039.2024.2385644
Acemoglu, D., & Robinson, J. A. (2012). Why Nations Fail: The Origins of Power, Prosperity, and Poverty. New York: Crown Business.
Adnan, K., Yin, K., Adrian, C. C., Cristina, G. Z., Sun, Q., & Duan, W. (2020). Is the relationship between remittances and economic growth influenced by the governance and development of the financial sector? New evidence from the developing countries. Romanian Journal of Economic Forecasting, 23(1), 37–56.
Authers, J., & Leatherby L. (2019). As China’s Debt Balloons, Other Emerging Markets Fail to Take Of. https://www.bloomberg.com/graphics/2019-emerging-markets-debt/. Accessed 8 Apr 2020.
Anetor, F. O. (2019). Remittances and Economic Growth Nexus in Nigeria: Does financial sector development play a critical role?. International Journal of Management, Economics and Social Sciences, 8(2), 116–135. https://doi.org/10.32327/IJMESS/8.2.2019.8
Alemu, T. A., & Zegeye, M. B. (2024). Empirical investigation on the dynamics effects of population and economic growth in Ethiopia: an application of the VEC model. Cogent Social Sciences, 10(1). https://doi.org/10.1080/23311886.2024.2338861
Alhassan, U. (2023) E-government and the impact of remittances on new business creation in developing countries. Economic Change Restructuring 56:181–214. https://doi.org/10.1007/s10644-022-09418-z.
Alfada, A. (2023). The destructive effect of corruption on economic growth in Indonesia: A Threshold model, Heliyon, 5(10). https://doi.org/10.1016/j.heliyon.2019.e02649
Arbia, A., Sobhi, K., Karim, M., & Eddaou M. (2023). FDI, Information and Communication Technology, and Economic Growth: Empirical Evidence from Morocco. Advances in Management and Applied Economics. 13(6), 1-10. https://doi.org/10.47260/amae/13610.
Bucevska, V. (2022). Impact of Remittances on Economic Growth: Empirical Evidence from South-East European Countries. South East European Journal of Economics and Business, 17(1), 79-94. https://doi.org/10.2478/jeb-2022-0006.
Chenery, H.B. (1967). Foreign Assistance and Economic Development. In: Adler, J.H. (eds) Capital Movements and Economic Development. International Economic Association Conference Volumes. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-15238-4_9
Cazachevici, A., Havranek, T., & Horvath, R. (2020). Remittances and economic growth: A meta-analysis. World Development, 134, Article 105021. https://doi.org/10.1016/j.worlddev.2020.105021
Chowdhury, M. (2016). Financial Development, Remittances and Economic Growth: Evidence Using a Dynamic Panel Estimation. Margin: The Journal of Applied Economic Research, 10(1), 35–54. https://doi.org/10.1177/0973801015612666
Dickey, D. A., & Fuller, W. A. (1979). Distribution of the Estimators for Autoregressive Time Series with a Unit Root. Journal of the American Statistical Association, 74(366a), 427–437. https://doi.org/10.1080/01621459.1979.10482531
Dokas, I., Panagiotidis, M., Papadamou, S., & Spyromitros, E. (2023). Does innovation affect the impact of corruption on economic growth? International evidence. Economic Analysis and Policy, 77(C), 1030-1054. https://doi.org/10.1016/j.eap.2022.12.032
Engle, R., & Granger, C. (1987). Cointegration and error correction: Representation, estimation and testing. Econometrica, 55(2), 251–276. https://doi.org/10.2307/1913236
Elsadig, M., & Rahim, K. (2023). FDI inflows spillover effect implications on the Asian‐Pacific labour productivity. International Journal of Finance & Economics, 28(1), 575-588. https://doi.org/10.1002/ijfe.2437. January
Nkoro, E., & Uko, A. K. (2016). Autoregressive Distributed Lag (ARDL) Cointegration technique: Application and interpretation. Journal of Statistical and Econometric Methods, SCIENPRESS Ltd, 5(4), 1–3.
Han, X., Khan, H., & Zhuang, J. (2014). Do Governance Indicators Explain Development Performance? A Cross-Country Analysis. Asian Development Bank Economics Working Paper Series No. 417. http://dx.doi.org/10.2139/ssrn.2558894.
Hansen, B. E. (1999). Threshold effects in non-dynamic panels: Estimation, testing, and inference. Journal of Econometrics, 93(2), 345–368. https://doi.org/10.1016/S0304-4076(99)00025-1.
Islam, M. S. (2022). Do personal remittances influence economic growth in South Asia? A panel analysis. Review of Development Economics, 26(1), 242–258. https://doi.org/10.1111/rode.12842.
Imai, K. S., Gaiha, R., Ali, A., & Kaicker, N. (2014). Remittances, growth, and poverty: NEW evidence from Asian countries. Journal of Policy Modeling, 36(3), 524-538. https://doi.org/10.1016/j.jpolmod.2014.01.009
Johansen, S., & Juselius, K. (1990). Maximum Likelihood Estimation and Inference on Cointegration—With Appucations to The Demand for Money. Oxford bulletin of economics and statistics, 52(2), 169–210. https://doi.org/10.1111/j.1468-0084.1990.mp52002003.x
Jushi, E., Hysa, E., Cela, A., Panait, M., & Voica, M. C. (2021). Financing growth through remittances and foreign direct investment: Evidence from Balkan countries. Journal of Risk and Financial Management, 14(3), 117. https://doi.org/10.3390/jrfm14030117
Matuzeviciute, K., & Butkus, M. (2016). Remittances, Development Level, and Long-Run Economic Growth. Economies, 4(28), 1–20. https://doi.org/10.3390/economies4040028.
Tchekoumi, L. B., & Nya, P. D. (2023) Remittances and economic growth: What lessons for the CEMAC zone?, Cogent Economics & Finance, 11(1). https://doi.org/10.1080/23322039.2023.2191448.
Menegaki, A. N. (2019). The ARDL Method in the Energy-Growth Nexus Field; Best Implementation Strategies. Economies, 7(4), 105. https://doi.org/10.3390/economies7040105
Hadush, M., Gebregziabher, K. G., & Biruk, S. (2023). Determinants of economic growth in East African countries: A dynamic panel model approach. Cogent Economics & Finance, 11(2). https://doi.org/10.1080/23322039.2023.2239629
Olayungbo, D. O., & Quadri, A. (2019). Remittances, financial development and economic growth in sub-Saharan African countries: evidence from a PMG-ARDL approach. Financial Innovation, 5(9). https://doi.org/10.1186/s40854-019-0122-8
Oteng-Abayie, E., Awuni, P. A., & Adjei, T. K. (2020). The Impact of Inward remittances on Economic growth in Ghana. African Journal of Economic Review, 8(3), 49–65. https://doi.org/10.22004/ag.econ.308775.
Peterson, E. W. F. (2017). The role of population in economic growth. SAGE Open, 7(4), 2158244017736094. https://doi.org/10.1177/2158244017736094
Rehman, N. U., Hysa, E., & Poon, W. C. (2021). The effect of financial development and remittances on economic growth. Cogent Economics & Finance, 9(1). https://doi.org/10.1080/23322039.2021.1932060
Sadiq, K., & Tsourapas, G. (2021). The Postcolonial Migration State, European Journal of International Relations, 27(3). https://doi.org/10.1177/13540661211000114
Sutradhar, S. R. (2020). The impact of remittances on economic growth in Bangladesh, India, Pakistan, and Sri Lanka. International Journal of Economic Policy Studies, 14, 275–295. https://doi.org/10.1007/s42495-020-00034-1
Sarker, B., & Khan, F. (2020). Nexus between foreign direct investment and economic growth in Bangladesh: an augmented autoregressive distributed lag bounds testing approach. Financial Innovation, 6(10). https://doi.org/10.1186/s40854-019-0164-y
Sobiech, I. (2015). Remittances, finance and growth: Does financial development foster remittances and their impact on economic growth?. FIW Working Paper Series, 158. https://hdl.handle.net/10419/121159
DESA, U. N. (2020). The International Migration report (Highlights). Department of Economic and Social Affairs.
Ustarz, Y., & Issahaku, H. (2017). International Migrant Remittance and Productivity Growth in Ghana. Ghana Journal of Development Studies, 14(2), 63–82. https://doi.org/10.4314/gjds.v14i2.4
Yavuz, R. I., & Bahadir, B. (2022). Remittances, ethnic diversity, and entrepreneurship in developing countries. Small Business Economics, 58, 1931–1952. https://doi.org/10.1007/s11187-021-00490-9
Zohry, A. (2013). Egypt's International Migration after the Revolution: Is There Any Change?. Confluences Méditerranée, 87, 47-54. https://doi.org/10.3917/come.087.0047.