Journal of Emerging Trends in Economics and Management Sciences: Home

Abstract:
This paper uses a sectoral data set from Tunisia to analyze how the remittances affect the economic growth during over the period from 1987 to 2012. To achieve this objective we use a sectoral database of remittances allocated to investment, in contrast with the majority of studies which have used all the amount of remittances. We assume that using remittances allocated to investment can generate a direct and more significant effect on growth. Our empirical analysis is based on the dynamic panel approach (GMM method) and conducted on a sample of 3 economic sectors (Agriculture, industry and services). The findings of this paper suggest that remittances have significantly contributed to economic growth. In spite of the amount of remittances allocated to investment is smaller than the one allocated to consumption, remittances enhance the share of the sectoral value added in GDP in the economy. Indeed, 1% increase in remittances allocated to investment would increase the VA/GDP ratio by 1% to 4%. The study also finds that investment and Labor constitute the major contributors of the economic growth in Tunisia. However, the technical efficiency is negative. Further, in the Tunisian context characterized by a high unemployment rate and great regional disparities, remittances can play an important role. Therefore, some policy implications can be proposed such as for example an incentive policy to encourage migrants to remit more funds and to invest in productive fields. This can be achieved by reinforcing social networks, reviewing the current remittances fees, and ameliorating the affairs climate essentially at the regional level.

Keywords: migration, remittances, economic growth, dynamic panel data, GMM method.

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