A Study On Impacts Of Remittances Upon Economic Growth Of Remittance-receiving Countries

Since the1990s, with the development of economic globalization, remittances are increasing rapidly, which has become the second largest source of capital inflows for many developing countries. The growth of remittances has attracted more attention. However, scholars in China made few study on the relationship between remittances and the economic growth of remittance-receiving countries. Especially, there is no deeply research on the mechanism of the remittances on China’s economic development. In this paper, I try to make the theoretical and empirical study, which based on the previous analysis of the impact of remittance on economic developments of remittance-receiving countries.Theoretically, this paper analyzed three channels:capital accumulation, labor force growth, the efficiency of capital accumulation and the real exchange rate, through which remittance receipts can in principle affect growth. Based on the analysis, paper clarified the mechanism of how remittance influence on the growth.Empirically, this paper estimated the relationship between remittances and the economic growth of developing countries, and tested whether the recipient country’s financial depth could influence the impact of remittances on growth. This paper also studied the relationship between remittances and the economic growth of China, In this part, I firstly examined the determinants of remittances in China by constructing a simple two-period model. Then I established an equilibrium real exchange rate estimating equation using co-integration test to analyze the relationship between remittances and economic growth in the long run. Finally, I tested whether the remittances could lead to real exchange rate appreciation, which could impede growth by "Dutch disease".The main conclusions of this paper are as follows:1、Remittances have a negative impact on economic growth in the developing countries and the influences vary across the different regions.2、 Remittances are countercyclical, but self-interest is the main reason for remitting in China.3、In the long run, remittances have a positive influence on economic growth in China.4\Remittances lead to real exchange rate appreciation and resource movement effect that favor the non-tradable sector at the expense of tradable goods production.