Remittance Inflow and Economic Growth: The Case of Georgia

Azer Dilanchiev; Ahmet Sekreter

Azer Dilanchiev International Black Sea University, Tbilisi, Georgia.
Ahmet Sekreter Suleyman Sah University, Istanbul, Turkey

Keywords: Remittances Inflow, Economic Growth, Unit Root Test, VAR Granger Causality Test.

Abstract

Remittance inflow become one of the main source of capital flows in the world. It is noted that remittance is very effective in promoting household welfare and as an alternative source of capital inflow. However in it uncertain whether or not it leads to economic growth. This article examines the effects of remittances inflow on economic growth in Georgian republic. The impact of remittance inflow on GDP growth was analyzed and tested by Unit Root Test, Johansen Co-integration and VAR Granger Causality/Block Exogeneity Wald Tests. In the paper the quarterly data interval from the first quarter of 1999 to third quarter of 2015 was used. As a result it was found out that that there is a nexus between remittance and GDP and it is concluded that remittance leads to increase in GDP growth.

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