THE IMPACT OF REMITTANCES ON DOMESTIC INVESTMENT IN DEVELOPING COUNTRIES: FRESH EVIDENCE FROM THE ASIA-PACIFIC REGION
THE IMPACT OF REMITTANCES ON DOMESTIC INVESTMENT IN DEVELOPING COUNTRIES: FRESH EVIDENCE FROM THE ASIA-PACIFIC REGION

Summary/Abstract: Despite the sharply increasing remittances in developing countries (especially in the Asia- Pacific region), the relationship between remittances and domestic investment in recipient countries has not been fluently evidenced. This paper aims to fill the empirical gap in the Asia-Pacific region by investigating the impact of remittances on domestic investment with a sample including nineteen developing countries based on time series data from 1980 to2015. However, our findings contradict some evidence from other regions. The results robustly confirm that remittances have a negative impact on domestic investment in these countries. Our results also indicate that the annual GDP per capita growth, official development assistance, domestic credit, gross saving, and inflation have a positive impact on domestic investment, however, we conclude that the impact of trade openness on domestic investment has a negative sign in the study period. The paper also provides some policy suggestions with regard to remittance flows in this region.

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