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The Role of Workers' Remittances and Their Interaction with Physical and Human Capital in Stimulating Economic Growth in Jordan (1979-2015)

Received: 09 October 2020    Accepted: 20 October 2020    Published: 26 October 2020
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Abstract

The objectives of this research are diverse. First, determine the impact of workers’ remittances on Jordan’s economic growth during the period. The second goal in the second and third models is to determine the role of remittance in economic growth if we allow the interaction between workers’ remittances and human capital and physical capital, according to the theory of endogenous growth. For this purpose, time series analysis (cointegration tests and vector error correction model) is used. Corresponding it is found that all the series representing the variables are stationary at the first difference. The results also show that there are two cointegration vectors relating the variables. Therefore, the model was estimated using vector error correction model, which showed a long-term relationship between economic growth and explanatory variables. The estimate according to the first model showed that there is a significant positive effect for each of the workers' remittances, the variables of trade openness, financial policy, and the development of the financial system. while the physical and human capital variables have significance negative impact on growth. In the second and third model, it agreed with the endogenous growth theory, that if workers 'remittances are directed towards supporting physical and human capital, the impact of workers' remittances on economic growth will increase.

DOI 10.11648/j.ijber.20200905.19
Published in International Journal of Business and Economics Research (Volume 9, Issue 5, October 2020)
Page(s) 354-363
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Workers’ Remittances, Human Capital, Economic Growth, Physical Capital, Endogenous Growth Theory

References
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[2] Amuedo-Dorantes, C. and Pozo, S. (2004). Workers’ remittances and the real exchange rate: A paradox of gifts. World development, 32 (8), 1407–1417.
[3] Amuedo-Dorantes, C., Georges, A., & Pozo, S. (2008). Migration, remittances, and children's schooling in Haiti. The Annals of the American Academy of Political and Social Science, 630 (1), 224–244.
[4] Barajas, A., Chami, R., Fullenkamp, C., Gapen, M. T. and Montiel, P. (2009). Do workers’ remittances promote economic growth? IMF Working Paper No. 09/153.
[5] Becker, S. G. 1993. Human capital: A Theoretical and Empirical Analysis with Special References to Education. National Bureau of Economic research. University of Chicago Press, Chicago, USA.
[6] Buch, C., Kuckulenz, A., & Le Manchec, M. (2002). Worker remittances and capital flows. Kiel working paper no. 1130. Kiel: Kiel Institute for World Economics.
[7] Chami, R., Barajas, A., Garg, A. and Fullenkamp, C. (2010a). The global financial crisis and workers’ remittances to Africa: What’s the damage? IMF Working Paper No. 10/24.
[8] Desai, M., Kapoor, D., and McHale, J. (2001), ‘The Fiscal Impact of the Brain Drain: Indian Emigration to the U. S.,’ Weekly Political Economy Discussion Paper, Harvard University. www.wcfia.harvard.edu/ seminars/pegroup.
[9] Edwards, A. C., & Ureta, M. (2003). International migration, remittances, and schooling: Evidence from El Salvador. Journal of Development Economics, 72 (2), 429–461.
[10] El-Sakka, M. I. T.,(2007), “Migrant Workers‟ Remittances and Macroeconomic Policy in Jordan”, Arab Journal of Administrative Sciences.
[11] Gitter, S. R., & Barham, B. L. (2007). Credit, natural disasters, coffee, and educational attainment in rural Honduras. World Development, 35 (3), 498–511.
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[13] Gupta, S., Pattillo, C. A. andWagh, S. (2009). Effect of remittances on poverty and financial development in Sub-Saharan Africa. World development, 37 (1), 104–115.
[14] KARAGÖZ (2009), Workers remittances and economic growth:evidence from Turkey, Journal of Yasar University, 4 (13), pp.1891-1908.
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[16] M. SayedAbouElseoud (2014), Do Workers' Remittances Matter for the Egyptian Economy, International Journal of Applied Operational Research Vol. 4, No. 1, pp. 1-26.
[17] Makki, S. (2004)."Impact of Foreign Direct Investment and Trade on Economic Growth", American Journal of Agricultural Economics vol. 86, issue 3, 795-801.
[18] Mim, Sami and Mohamed Ali (2012). Through Which Channels Can Remittances Spur Economic Growth in MENA Countries? Economics, 6: 2012-33.
[19] Nsiah, C., &Fayissa, B. (2011). Remittances and economic growth in Africa, Asia, and Latin American-Caribbean countries: a panel unit root and panel cointegration analysis. Journal of Economics and Finance, 1-18.
[20] Perkins, D., Radelet, S., Snodgrass, D., Gillis, M., and Romer, M. (2001), Economics of Development (5th ed.), New York: W. W. Norton & Company.
[21] Romer, P. M. (1990). Endogenous technological change. Journal of Political Economy, 98 (5, Part 2), S71–S102.
[22] Stahl, C., and Arnold, F. (1986), ‘Overseas Workers’ Remittances in Asian Development,’ International Migration Review, 20, 4, 899–925.
[23] Udah, E. B. (2011). Remittances, human capital and economic performance in Nigeria International Journal of Human Development and Sustainability, 4 (1), 103–117.
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Author Information
  • Department of Management Sciences, Al-Rashid International Private University, Damascus, Syria

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    Eyad Moufaq Alkousini. (2020). The Role of Workers' Remittances and Their Interaction with Physical and Human Capital in Stimulating Economic Growth in Jordan (1979-2015). International Journal of Business and Economics Research, 9(5), 354-363. https://doi.org/10.11648/j.ijber.20200905.19

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    Eyad Moufaq Alkousini. The Role of Workers' Remittances and Their Interaction with Physical and Human Capital in Stimulating Economic Growth in Jordan (1979-2015). Int. J. Bus. Econ. Res. 2020, 9(5), 354-363. doi: 10.11648/j.ijber.20200905.19

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    AMA Style

    Eyad Moufaq Alkousini. The Role of Workers' Remittances and Their Interaction with Physical and Human Capital in Stimulating Economic Growth in Jordan (1979-2015). Int J Bus Econ Res. 2020;9(5):354-363. doi: 10.11648/j.ijber.20200905.19

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  • @article{10.11648/j.ijber.20200905.19,
      author = {Eyad Moufaq Alkousini},
      title = {The Role of Workers' Remittances and Their Interaction with Physical and Human Capital in Stimulating Economic Growth in Jordan (1979-2015)},
      journal = {International Journal of Business and Economics Research},
      volume = {9},
      number = {5},
      pages = {354-363},
      doi = {10.11648/j.ijber.20200905.19},
      url = {https://doi.org/10.11648/j.ijber.20200905.19},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.ijber.20200905.19},
      abstract = {The objectives of this research are diverse. First, determine the impact of workers’ remittances on Jordan’s economic growth during the period. The second goal in the second and third models is to determine the role of remittance in economic growth if we allow the interaction between workers’ remittances and human capital and physical capital, according to the theory of endogenous growth. For this purpose, time series analysis (cointegration tests and vector error correction model) is used. Corresponding it is found that all the series representing the variables are stationary at the first difference. The results also show that there are two cointegration vectors relating the variables. Therefore, the model was estimated using vector error correction model, which showed a long-term relationship between economic growth and explanatory variables. The estimate according to the first model showed that there is a significant positive effect for each of the workers' remittances, the variables of trade openness, financial policy, and the development of the financial system. while the physical and human capital variables have significance negative impact on growth. In the second and third model, it agreed with the endogenous growth theory, that if workers 'remittances are directed towards supporting physical and human capital, the impact of workers' remittances on economic growth will increase.},
     year = {2020}
    }
    

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    AB  - The objectives of this research are diverse. First, determine the impact of workers’ remittances on Jordan’s economic growth during the period. The second goal in the second and third models is to determine the role of remittance in economic growth if we allow the interaction between workers’ remittances and human capital and physical capital, according to the theory of endogenous growth. For this purpose, time series analysis (cointegration tests and vector error correction model) is used. Corresponding it is found that all the series representing the variables are stationary at the first difference. The results also show that there are two cointegration vectors relating the variables. Therefore, the model was estimated using vector error correction model, which showed a long-term relationship between economic growth and explanatory variables. The estimate according to the first model showed that there is a significant positive effect for each of the workers' remittances, the variables of trade openness, financial policy, and the development of the financial system. while the physical and human capital variables have significance negative impact on growth. In the second and third model, it agreed with the endogenous growth theory, that if workers 'remittances are directed towards supporting physical and human capital, the impact of workers' remittances on economic growth will increase.
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