International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

Remittances and Economic Growth Nexus: Evidence from Jordan
Samer Abdelhadi, Ala’ Bashayreh

Remittances considered as one of the most important sources of financial inflows for developing countries. This study aims at investigating whether remittances have a significant role in promoting economic growth in Jordan or not. For this purpose the study tests the unit root for the variables and applies the cointegration test besides the error correction model using annual data for the period 1972 to 2016. Results reveal that there is a stable long run relationship between GDP percapita and remittances in Jordan as well as in the short run. As a result, the study confirms the positive significant effect of remittances on economic growth. In other words, remittances of Jordanians enhancing economic growth for local Jordanians which improve standards of living and participate in reducing level and depth of poverty in Jordan. The study recommends cutting fees on remittances transfers and to direct Jordanians to invest remittances in productive projects in order to achieve high economic growth, increase employment, and eventually improve the standard level of living. Besides, the study recommends liberalizing movement of workers across Arab countries and foreign friend countries. Moreover there is a real need for conducting more studies that reveal the ways of spending remittances in Jordan.

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