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Worker Remittances Compared to Other Elements of External Financing and Their Impact on Economic Growth and Human Capital in Jordan (1979-2015)

Received: 18 September 2020     Accepted: 30 September 2020     Published: 12 October 2020
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Abstract

The objective of this study is to measure the impact of the workers' remittances on economic growth in Jordan during the period 1979-2015 by enhancing human 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 showed that there is a positive effect of statistical significance for each of the remittances of workers and foreign loans, and a positive effect that is not statistically significant for both foreign direct investment and foreign aid. The study concluded with several recommendations that we summarize regarding the importance of workers' remittances as an external source of financing, characterized by its relative stability, low costs and not being directly linked to any requirements, which makes it one of the most important external sources of financing in addition to a role in supporting the absorptive capacity of human capital and thus supporting economic growth and deepening the role of capital (capital deepening) and raise its productivity. On the other hand, the need to better direct the sources of external flows towards projects that support the absorptive capacity (knowledge, skills and experiences) of the workforce, by raising the proportion of foreign aid and foreign loans directed towards spending on education, training and skills acquisition, which enhances their role in the short and long term in economic growth as well as Towards capital projects, which may enhance the role of workers' remittances.

Published in International Journal of Economics, Finance and Management Sciences (Volume 8, Issue 5)
DOI 10.11648/j.ijefm.20200805.14
Page(s) 194-204
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), 2020. Published by Science Publishing Group

Keywords

Workers’ Remittances, Human Capital, Economic Growth, Foreign Direct Investment, External Loans, Foreign Aid

References
[1] Adams, Richard. (2008). "The Demographic, Economic and Financial Determinants of International Remittances in Developing Countries". World Bank. 4583.
[2] AltinGjini (2013), The Role of Remittances on Economic Growth: An Empirical Investigation Of 12 CEE Countries,International Business & Economics Research Journal, Volume 12, Number 2.
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[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] C., & Kuckulenz, A. (2004). Worker remittances and capital flows to developing countries. Centre for European Economic Research (ZEW) discussion paper 04 31. Mannheim: ZEW.
[8] Catrinescu, N., Leon-Ledesma, M., Piracha, M., and Quillin, B. (2005), IZA Discussion Paper No. 2139. http://ssrn.com/abstract ¼ 902342.
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[10] Edwards, A., and Ureta, M. (2003), ‘International Migration, Remittances, and Schooling: Evidence from El Salvador,’ NBER Working Paper No. w 9766, June.
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[12] Gapen, M. T., Chami, M. R., Montiel, M. P., Barajas, M. A., & Fullenkamp, C. (2009). Do workers' remittances promote economic growth? (No. 9-153). International Monetary Fund.
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    Eyad Moufaq Alkousini. (2020). Worker Remittances Compared to Other Elements of External Financing and Their Impact on Economic Growth and Human Capital in Jordan (1979-2015). International Journal of Economics, Finance and Management Sciences, 8(5), 194-204. https://doi.org/10.11648/j.ijefm.20200805.14

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    ACS Style

    Eyad Moufaq Alkousini. Worker Remittances Compared to Other Elements of External Financing and Their Impact on Economic Growth and Human Capital in Jordan (1979-2015). Int. J. Econ. Finance Manag. Sci. 2020, 8(5), 194-204. doi: 10.11648/j.ijefm.20200805.14

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    AMA Style

    Eyad Moufaq Alkousini. Worker Remittances Compared to Other Elements of External Financing and Their Impact on Economic Growth and Human Capital in Jordan (1979-2015). Int J Econ Finance Manag Sci. 2020;8(5):194-204. doi: 10.11648/j.ijefm.20200805.14

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  • @article{10.11648/j.ijefm.20200805.14,
      author = {Eyad Moufaq Alkousini},
      title = {Worker Remittances Compared to Other Elements of External Financing and Their Impact on Economic Growth and Human Capital in Jordan (1979-2015)},
      journal = {International Journal of Economics, Finance and Management Sciences},
      volume = {8},
      number = {5},
      pages = {194-204},
      doi = {10.11648/j.ijefm.20200805.14},
      url = {https://doi.org/10.11648/j.ijefm.20200805.14},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20200805.14},
      abstract = {The objective of this study is to measure the impact of the workers' remittances on economic growth in Jordan during the period 1979-2015 by enhancing human 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 showed that there is a positive effect of statistical significance for each of the remittances of workers and foreign loans, and a positive effect that is not statistically significant for both foreign direct investment and foreign aid. The study concluded with several recommendations that we summarize regarding the importance of workers' remittances as an external source of financing, characterized by its relative stability, low costs and not being directly linked to any requirements, which makes it one of the most important external sources of financing in addition to a role in supporting the absorptive capacity of human capital and thus supporting economic growth and deepening the role of capital (capital deepening) and raise its productivity. On the other hand, the need to better direct the sources of external flows towards projects that support the absorptive capacity (knowledge, skills and experiences) of the workforce, by raising the proportion of foreign aid and foreign loans directed towards spending on education, training and skills acquisition, which enhances their role in the short and long term in economic growth as well as Towards capital projects, which may enhance the role of workers' remittances.},
     year = {2020}
    }
    

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  • TY  - JOUR
    T1  - Worker Remittances Compared to Other Elements of External Financing and Their Impact on Economic Growth and Human Capital in Jordan (1979-2015)
    AU  - Eyad Moufaq Alkousini
    Y1  - 2020/10/12
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    T2  - International Journal of Economics, Finance and Management Sciences
    JF  - International Journal of Economics, Finance and Management Sciences
    JO  - International Journal of Economics, Finance and Management Sciences
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    EP  - 204
    PB  - Science Publishing Group
    SN  - 2326-9561
    UR  - https://doi.org/10.11648/j.ijefm.20200805.14
    AB  - The objective of this study is to measure the impact of the workers' remittances on economic growth in Jordan during the period 1979-2015 by enhancing human 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 showed that there is a positive effect of statistical significance for each of the remittances of workers and foreign loans, and a positive effect that is not statistically significant for both foreign direct investment and foreign aid. The study concluded with several recommendations that we summarize regarding the importance of workers' remittances as an external source of financing, characterized by its relative stability, low costs and not being directly linked to any requirements, which makes it one of the most important external sources of financing in addition to a role in supporting the absorptive capacity of human capital and thus supporting economic growth and deepening the role of capital (capital deepening) and raise its productivity. On the other hand, the need to better direct the sources of external flows towards projects that support the absorptive capacity (knowledge, skills and experiences) of the workforce, by raising the proportion of foreign aid and foreign loans directed towards spending on education, training and skills acquisition, which enhances their role in the short and long term in economic growth as well as Towards capital projects, which may enhance the role of workers' remittances.
    VL  - 8
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Author Information
  • Department of Management Sciences, Al-Rashid International Private University, Damascus, Syria

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