Is There a Link between Remittances, Capital Formation, Structural Transformation and Economic Growth? A Dynamic Panel Analysis for Latin America under the PVAR Approach

The literature has mainly focused on analyzing the relationship of remittances with economic growth and social welfare, neglecting more complex aspects where remittances can have relevant implications. To contribute to the literature, the objective of this research is to examine the dynamic relation...

Full description

Saved in:
Bibliographic Details
Published inEconomies Vol. 12; no. 5; p. 109
Main Authors Zurita Moreano, Eduardo Germán, González Bautista, María Gabriela, Vallejo Mata, Juan Pablo, Ayaviri-Nina, Víctor Dante
Format Journal Article
LanguageEnglish
Published Basel MDPI AG 01.05.2024
Subjects
Capital formation
Consumption
Developing countries
Economic development
Economic growth
Efficiency
Emigrant remittances
Employment
GDP
Gross Domestic Product
LDCs
Productivity
PVAR
Remittances
Structural adjustment (Economic policy)
structural transformation
Value added
Latin America
Honduras
Online AccessGet full text

Cover

More Information
Summary:The literature has mainly focused on analyzing the relationship of remittances with economic growth and social welfare, neglecting more complex aspects where remittances can have relevant implications. To contribute to the literature, the objective of this research is to examine the dynamic relationship between remittances, capital formation, structural transformation and economic growth in 15 Latin American countries during the period 1996–2019. To meet the objective, a panel vector autoregressive regression (PVAR) model was estimated, focusing on the analysis of the impulse-response function and variance decomposition. The results show a positive effect of remittances on economic growth and capital formation and a negative effect of remittances on structural transformation for initial periods and positive for later periods, framing a non-linear relationship. In addition, it was determined that structural transformation does not have a significant impact on economic growth. Finally, it was found that capital formation has a partial positive effect on economic growth. It is concluded that public policies should generate support mechanisms for the efficient channeling of these resources so that they become engines of growth.
ISSN:2227-7099
2227-7099
DOI:10.3390/economies12050109