Unveiling the impact of remittances on productive efficiencies: investigating productivity growth of prominent remittance-receiving developing nations
International Journal of Productivity and Performance Management
ISSN: 1741-0401
Article publication date: 18 September 2024
Abstract
Purpose
The present study reviews the theoretical and empirical literature about the significance of international migrants' remittance to empirically analyse the effect of remittance on the productivity growth of developing countries using a panel dataset from 1991 to 2021.
Design/methodology/approach
The study utilised the data envelopment analysis (DEA)-based Malmquist Productivity Index (MPI) to measure nationwide production efficiencies. It first performed a unit root test, cointegration test and pool mean group autoregressive distributed lag (PMG-ARDL) technique. To assess the robustness of the findings, the study also uses dynamic ordinary least squares (DOLS) and fully modified OLS (FMOLS) estimators.
Findings
The results demonstrated that remittances are a significant source of funding that promotes innovation [i.e. technological progress (TEC)] and hastens the country's total factor productivity (TFP) growth. However, the study needed to have established the effect of inward remittances on the nation's technical efficiency (EFF).
Research limitations/implications
As remittances encourage innovation and TFP growth (TFPG), the concerned governments must create favourable and enabling economic environments to increase remittance inflows, which will have far-reaching growth repercussions.
Originality/value
The present study emphasises the connection between remittances and productivity growth, the disintegration of TFP, advanced econometric techniques and contribution to research policy. Despite prior literature exploring the effect of remittances on economic growth, a dearth of literature exists on how remittances affect a country's productivity. The output-based MPI methodology used in this study offered a nuanced understanding of how remittances affect many facets of productivity growth in developing nations.
Keywords
Acknowledgements
Conflict of interest: All authors certify that they have no affiliations with or involvement in any organization or entity with any financial interest or non-financial interest in the subject matter or materials discussed in this manuscript. The authors have no financial or proprietary interests in any material discussed in this article.
Citation
Verma, B., Bhardwaj, M., Arora, S. and Oberoi, S. (2024), "Unveiling the impact of remittances on productive efficiencies: investigating productivity growth of prominent remittance-receiving developing nations", International Journal of Productivity and Performance Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJPPM-05-2023-0213
Publisher
:Emerald Publishing Limited
Copyright © 2024, Emerald Publishing Limited