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Impacts of FDI and Remittance Inflows in Developing Asia: A Comparative Dynamic Panel Study
Author(s) -
Sinha Madhabendra,
Tirtosuharto Darius,
Sengupta Partha Pratim
Publication year - 2019
Publication title -
economic papers: a journal of applied economics and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.245
H-Index - 19
eISSN - 1759-3441
pISSN - 0812-0439
DOI - 10.1111/1759-3441.12260
Subject(s) - foreign direct investment , remittance , endogeneity , economics , panel data , developing country , international economics , exchange rate , monetary economics , macroeconomics , econometrics , economic growth
The paper explores the macroeconomic impacts of foreign direct investment (FDI) and remittance inflows in developing Asia. Asian developing economies are identified as the highest receiver of remittances and the region has also been consistently performing well in receiving of FDI inflows. As an external source of capital formation, inflows of FDI and remittances affect foreign exchange rates and output. This study provides empirical evidence on the impact of FDI and remittances on real effective exchange rates and GDP in Asian developing countries using data over the period of 1981‐2015. Dynamic panel GMM technique is employed to overcome the endogeneity issue. Findings imply that both inflows of FDI and remittances have positive and significant impacts on exchange rates and GDP in developing Asia. Hence, remittances carry greater influence and significant impacts due to relatively stable inflows.