Economic and Political Effects of Remittances in The Developing World

Economic and Political Effects of Remittances in the Developing World
Economic and Political Effects of Remittances in

the Developing World
Maty Konte
United-Nations University (UNU-MERIT)
EMAEE, Maastricht, June, 2015

General Introduction
Overview
Overview
Significant increase in international inflows in many developing countries

(ODA, FDI, migrant remittances).
Remittances in 2013: three times larger than ODA; second largest inflows;
World Bank (October, 2014)).
World Bank (2014) projections: grow by 5.0% to reach US-dollar 435

billion in 2014 (accelerating from the 3.4% expansion of 2013), and rise
further by 4.4 percent to US-dollar 454 billion in 2015
Remittances as share of GDP amounted to more than 10% (Honduras,

Senegal); Over 20% (Lesotho, Moldova, Nepal), up to 30% in Tajikistan
or 42% in Kirgiz Republic.

Background
Background
I
Remittances have been associated with many desirable economic and

development features:
I
Inequality and Poverty alleviation (Adams and Page(2005)).
Education (Edwards and Ureta (2003)).
Consumption smoothness (Gupta et al(2009)).
Remittances and growth? Mixed results, different potential

mechanisms, inconclusive debate.
Beyond the economic angle: Remittances and institutions

I
Promote corruption (Abdih et al(2012))
Decline government effectiveness and accountability (Berdiev et

al(2013)) and rule of law.
Reduce the legitimacy of autocratic regimes and favor the likelihood

of a democratic transition (Wright et al(2012)
Remittances and democracy in Africa weakly documented.

Main Results
Main Results
I
Do Remittances Not Promote Growth in Developing countries?

I
Main results: Remittances do promote growth depending on the type

of growth regime that a country has. For a large number of SSA
countries remittances have the potential of increasing the level of the
economic growth.
Towards another Resource Curse? Remittances and Support for

Democracy in Africa
I
Main results: Remittances receivers may have a lower support for

democracy than their counterpart depending on the subtype of
individuals that we consider.The perception of the main national
priority helps to determine the sub-types of individuals. Choosing
freedom and rights decreases the likelihood to be in the subtype
where remittances reduce the degree of support for democracy.

Outline
Outline
1. Do Remittances Not Promote Growth? Konte(2014), UNU-MERIT

working paper.
2. The Effects of Remittances on Support for Democracy in Africa: Are
Remittances a Curse or a Blessing? Konte(2015), UNU-MERIT
working paper.
3. General Conclusion

Part I: Do Remittances Not Promote Growth?
Introduction
Growth and Remittances: Mixed Results

1. Optimistic view (Catrinescu et al(2009), WB(2006)):
I
Remittances stimulate the investment in human capital (Edwards

and Ureta(2003)); and the stock of physical capital(Lucas(2005),
Glytos (2002)).
Source of investment for small businesses and good talented
entrepreneurs financially constrained (Amuedo-Dorantes and Pozo
(2006a)).
2. Skeptical view: (chami et al(2003), Rao and hassan (2011); Singh et

al(2011)).
I
I
Not oriented towards growth-enhancing activities: Stark (1995)

Moral Hazard effect(Amuedo-Dorantes and Pozo (2006b), Lokshin
and Glinskaya(2009), Ebeke(2012) etc..)
Dutch Disease hypothesis: Acosta et al(2012); Bourdet and
Falck(2006).

Introduction
Remittances and Growth Regimes
Do all countries follow the same and unique growth regime?
Unobserved heterogeneity: deeply explored by Durlauf and Jonson(1995),

recent work by Owen et al(2009), Bos et al(2010) among others.
Yet, studies on remittances and growth have not really considered the
existence of multiple growth regimes.
Heterogeneity is considered by either dividing the sample based on

observed characteristics (income, geographical location, financial
development), or by terms of interactions with a-priori chosen variables.

introduction
Correcting Heterogeneity
I
Is dividing the sample fully correct possible unobserved heterogeneity?

1. Heterogeneity on one variable ignores potential heterogeneity on
other variables.
2. Countries with similar observed characteristics may share different
growth regimes (Owen et al(2009), Bos et al(2010), Konte(2014))
3. Countries with different observed characteristics may have common
growth regime (Owen et al(2009), Bos et al(2010))
This paper re-examines the effect of remittances on growth in a

sample of developing countries, and relaxes the hypothesis of the
uniqueness of growth regime in favor of multiple growth regimes.

Introduction
Contribution
First, we test whether countries follow different growth regimes, and test
whether the effect of remittances on growth depends on the growth
regime to which a country belongs.
Second, investigating to what extent the level of financial development

and geography may explain the classification of the countries into the
different growth regimes found.
Application of the Mixture of regression method (Owen et al(2009), Bos

et al(2010), Flachaire et al(2014), Konte(2014)..).
But using the recent Three-step Mixture regression (Vermunt et

al(2013)): More flexibility and a better fit.

Introduction
Related literature
1. The effect of remittances on growth in developing countries:
I
Different samples and different econometrics techniques, but results

remains mixed (Singh et al(2011), Catrinescu et al(2009), Chami et
al(2003)..)
2. Multiple growth regimes: correcting unobserved heterogeneity in growth

regressions
I
Starting with Durlauf and Johnson (1995), pooling all the countries
into one growth model is questionable
Recent studies have applied semi and nonparametric approach to test
the multiplicity of regimes (Bos et al(2010), Owen et al(2009)).
Institutions and multiple growth regimes (Flachaire et al(2014));
natural resources and growth (Konte(2014)).
3. Financial development and remittances: Substitutes or complements?

I
Giuliano and Ruiz-Arranz (2009), Bettin and Zazzaro (2011);

Nyamongo et al(2012).

Data
Descriptive Statistics
I
5-years panel data covering 1970-2010, yielding 8 time periods.
Two samples: Full (121 developing countries with at least one

observations); restricted (91 countries with at least 4 observations)
Table: Descriptive Statistics

Variable
growth
remit
ln(findev)
ln(pop+0.05)
ln(gdp)
ln(invest)
ln(open)
ln(inflation)
Obs
951
674
707
1040
951
970
970
847
Mean
1.48
.05
3.35
1.92
7.74
2.98
4.08
2.39
Std. Dev.
3.94
.09
.65
.24
.95
.57
.67
1.31
Min
-23.14
0
.54
-2.52
5.08
.43
.64
-3.73
Max
24.14
.89
5.38
2.61
10.17
4.29
5.53
8.68
Source
Penn World Table 7.1
World Development Indicators

Standard Estimation
Parametric estimations
growthi,t
= 0 + 1 gdp0,i,t + 2 (popi,t + 0.05) + 3 invi,t

+5 remiti,t + 6 opennessi,t + 7 inflati,t + 8 Xi,t + i,t
remit
ln(gdp)
pop
invest
open
inflation
findev
Constant
time
R-squared
Nb obs
Nb country
OLS
-0.0548
(1.509)
-0.285*
(0.152)
-1.567***
(0.501)
1.323***
(0.282)
0.237
(0.246)
0.00616
(0.120)
-0.0141
(0.230)
3.263*
(1.876)
..
0.154
579
121
FE
-4.199
(2.884)
-5.931***
(0.557)
0.347
(0.481)
1.635***
(0.389)
1.357***
(0.455)
-0.352***
(0.128)
-0.286
(0.410)
41.06***
(4.798)
..
0.344
579
121
RE
0.138
(2.007)
-0.624***
(0.219)
-0.600
(0.492)
1.468***
(0.329)
0.779**
(0.332)
-0.162
(0.125)
-0.491
(0.299)
3.369
(2.341)
..
579
121
OLS
0.328
(1.530)
-0.320**
(0.159)
-1.060**
(0.503)
1.423***
(0.283)
-0.0564
(0.261)
-0.150
(0.134)
0.213
(0.234)
2.574
(1.872)
..
0.160
517
92
FE
-2.842
(1.955)
-5.284***
(0.564)
0.484
(0.473)
1.634***
(0.389)
1.347***
(0.464)
-0.433***
(0.147)
-0.468
(0.424)
36.11***
(4.840)
..
0.335
517
92
OLS-IV
0.924
(1.648)
-0.258
(0.167)
-0.952*
(0.499)
1.383***
(0.303)
-0.188
(0.278)
-0.0329
(0.137)
0.0181
(0.243)
3.031
(1.889)
FE-IV
-4.656
(4.513)
-5.507***
(0.707)
0.667
(0.467)
1.535***
(0.418)
1.522***
(0.514)
-0.274*
(0.156)
-0.388
(0.493)
36.57***
(5.702)
0.167
450
92
450
92

Mixture of regression model
Single versus Multiple growth regimes

I
if K=1 then:
growthi,t = 0 + 1 remiti,t + 2 xi,t + ,
i,t N(0, 2 )
If K=2 then:
Group 1:
growthi,t
= 01 + 11 remiti,t + 21 xi,t + i,t,1 ,
1 N(0, 12 ),
Group 2:
growthi,t
= 02 + 12 remiti,t + 22 xi,t + i,t,2 ,
2 N(0, 22 )
If K=3 then:
Group 1:
growthi,t
= 01 + 11 remiti,t + 21 xi,t + 1 ,
1 N(0, 12 ),
Group 2:
growthi,t
= 02 + 12 remiti,t + 22 xi,t + 2 ,
2 N(0, 22 ),
Group 3:
.......
growthi,t
= 03 + 13 remiti,t + 23 xi,t + 3 ,
1 N(0, 32 )

Mixture of regression model: Step 1
Goodness of fit
I
What is the optimal number of growth regimes? (the optimal value for
K )?
Table: Goodness of fit

Number of regimes
K=1
K=2
K=3
K=4
f (growth|remit, x; ) =
K
X
BIC
2558.37
2524.42
2530.48
2535
CAIC
2574.37
2557.42
2580.48
2602
k fk (growth|remit, x; k , k )
k=1
I K: Number of growth regimes.

I k : Proportion of countries that follow follow the given growth regime k
I : Set of parameters.
(1)

Selected Model Estimation Results

growth
remit
ln(gdp)
ln(pop+0.05)
ln(invest)
ln(open)
ln(inflation)
..
..
..
Constant
time dummies
R-squared
Nb country
Nb obs
Class1
1 =0.47
-4.4505
(3.6469)
-1.4347***
(0.3876)
-5.883***
(1.2528)
2.1665***
(0.5374)
1.6858***
(0.6209)
-0.511**
(0.2569)
..
..
..
15.7128***
(4.6014)
....
0.2685
43
235
Class2
2 =0.53
3.7368***
(1.2785)
-0.0783
(0.1523)
0.1233
(0.364)
0.7229***
(0.2529)
-1.3009***
(0.2766)
-0.0587
(0.1439)
..
..
..
3.1418
(1.928)
.....
0.3808
49
282
Wald(=)
p-value
4.4422
0.035
10.2808
0.0013
0.21
<
5.7537
0.016
0.217
<
2.0336
0.15
..
..
..
6.0098
..
..
..
0.014

Classification of countries in regime 1, and in regime 2

Albania(0.974)
Botswana(1)
Dominica(0.99)
Gambia(0.98)
Indonesia(0.99)
Kyrgyzstan(0.93)
Moldova(0.92)
Paraguay(0.99)
Sierra Leone(0.69)
Suriname(1)
Thailand(1)
Bangladesh(0.84)
Burkina Faso(0.99)
Costa Rica(0.86)
Ethiopia(0.63)
Guatemala(0.83)
Iran(0.85)
Malawi(0.62)
Mexico(0.99)
Nicaragua(0.89)
Philippines(0.94)
South Africa(0.98)
Turkey(0.99)
Armenia(1)
Cambodia(1)
Dominican Republic(0.99)
Grenada(1)
Jamaica(0.99)
Laos(1)
Mozambique(0.99)
Peru(0.93)
Sri Lanka(0.99)
Swaziland(1)
Tonga(0.87)
Azerbaijan(1)
Cameroon(0.99)
Egypt(1)
Guinea-Bissau(0.99)
Jordan(1)
Malaysia(1)
Panama(1)
Romania(0.96)
St, Lucia(0.99)
Syria(0.87)
Vanuatu(0.99)
Benin(0.84)
Central African Republic(0.60)
Cote dIvoire(0.87)
Fiji(0.97)
Guinea(0.95)
Kenya(0.98)
Maldives(0.79)
Morocco(0.94)
Niger(1)
Rwanda(1)
Sudan(1)
Venezuela(0.52)
Bolivia(0.96)
Colombia(0.98)
Djibouti(0.78)
Gabon(0.92)
Honduras(0.58)
Lesotho(0.98)
Mali(0.89)
Namibia(0.70)
Nigeria(0.89)
Samoa(0.97)
Togo(0.99)
Yemen(0.81)
Belize(0.999)
Cape Verde(0.99)
El Salvador(0.71)
Guyana(0.99)
Kazakhstan(1)
Mauritius(0.89)
Papua New Guinea(0.98)
Seychelles(0.99)
St.Vincent Grenadines(0.99)
Tanzania(0.66)
Brazil(0.96)
Congo, Republic of(0.99)
Ecuador(0.52)
Ghana(0.85)
India(0.94)
Madagascar(0.99)
Mauritania(0.80)
Nepal(0.82)
Pakistan(0.84)
Senegal(0.99)
Tunisia(0.89)
Zimbabwe(0.89)

Determinants of the probability to be in regime 2
(
1
0
if the country i has a higher probability of being in regime 2 ,

otherwise
(2)
We can then estimate:
(i)
k2 =
pi = Prob(k(i)
p = 1, i )
(3)

Determinants of the probability to be in regime 2

Table: Determinants of class membership
Intercept
ln(credit/gdp)
[1]
1.7239
(1.6748)
-0.4981
(0.4692)
ln(liquid liab/gdp)
[2]
2.9646
(1.8858)
[3]
5.1256***
(1.7936)
[5]
3.6206*
(2.0428)
-0.8635*
(0.5222)
ln(broadmoney/gdp)
-1.4595***
(0.4917)
SSA
latincar
landlock
Nb obs
[4]
-0.5652
(0.4196)
91
92
92
1.2965**
(0.6287)
0.1587
(0.6625)
0.0448
(0.6809)
92
-1.1209**
(0.5314)
0.8166
(0.6055)
92

Conclusion
Part I: Conclusion
I
This paper seeks to shed light why it has been so difficult to find a
positive effect of remittances on growth rate.
It has relaxed the hypothesis of a single unique growth regime in favor of

multiple regimes.
Remittances affect growth differently across the growth regimes.
In one regime: remittances have a neutral effect on growth; in the other

one remittances have a positive effect (robust to different specifications
and sample size).
Being a SSA country increases the chance of being in the remittances

growth-enhancing activity.
Higher is the level of financial development, lower is the probability of

being in the remittances growth-enhancing regime.

Part II: The Effects of Remittances on Support for Democracy in Africa: Are Remittances a Curse or a Blessing?
Introduction
Remittances and political participation

I
Resource model of political participation by Brady et al(1995): Resources

(money, time and skills) are political participation enhancing.
In contrast, negative effect of remittances on political participation of

receivers.
Decrease the political engagement in municipalities with high level of

out-migrants (Goodman and Hiskey (2008)).
Decrease the likely to pressure and oppose politicians because they are
more optimistic about their economic conditions Germano (2013).
Mixed results for the African context: Less likely to vote (Ebeke and Yogo
(2013), Dione et al (2014)); more likely to contact government and to
take part in demonstrations and protests Dione et al (2014).

Introduction
Remittances and legitimacy

I
Remittances may sustain autocratic governments (Ahmed (2012))

I
Remittances and public spending as substitutes, thus leaders free-ride

and more patronage goods (Abdih et al(2011); Ahmed(2012))
Remittances may reduce the legitimacy of autocracies (Wright et

al(2012)) and favor process of democratization (Pfutze (2012,2014))
I
Difficult to pay supporters through patronage private goods. it

breaks the clientelistic relationship between citizens and leaders.
This paper tests whether remittances are a curse or a blessing for the
legitimacy of democracy in Africa.
It also looks at to what extent individuals perception of the main national

priorities may explain the link between remittances and legitimacy of
democracy.

Introduction
Determinants of support for democracy

I
Democracy is deposited as a universal value (Sen(1999)) and associated

to many desirable features (Persson and Tabellini (2006); Siegle et al
(2004)).
Micro level: Political scholars have pointed-out the legitimacy of

democracy (degree of support for democracy) as important determinant
of the level of democracy in a country (Diamond(1999)).
Different determinants of support for democracy (education, religion,

gender, income among others); what about remittance income?
We argue that the effect of remittances on support for democracy varies

across groups of individuals sharing similar but unobserved background
characteristics.

Introduction
Contribution
I
First, we consider the possibility of the existence of hidden clusters of

individuals sharing similar but unobserved background characteristics such
that the effect of individual socio-economic characteristics (including
remittances) on the degree of endorsement and support for democracy
depends on the cluster of individuals that we consider.
Second, we provide an analysis of the determinants of the subtypes of

individuals using the perception of the national priorities as potential
determinants (freedom and rights, economic conditions....).
Multilevel Mixture Regressions, recently developed for multilevel data

structure
Account for both country and individual possible unobserved

heterogeneity.

Introduction
Related literature
1. Remittances and quality of institutions.
I Negative: Corruption (Abdih et al(2012); Government effectiveness
and rule of law(Berdiev et al(2013));Sustain autocratic government
(Ahmed (2012))
I
Remittances and public spending as substitutes, thus leaders free-ride

and more patronage goods (Abdih et al(2011); Ahmed(2012))
Positive: Reduce the legitimacy of autocracies (Wright et al(2012));

Favor process of democratization (Pfutze (2012,2014))
I
Difficult to pay supporters through patronage private goods. it break

the clientelistic relationship between citizens and leaders.
2. Remittances and political involvement, participation and choice.

I Remittances are associated with a decrease of political engagement
in Mexico(Germano(2013)
I
Mixed results for the African context (Dione et al(2014))
3. Determinants of support for democracy in Africa.

I Education (Evans and al(2007)); Gender (Garcia-Penalosa and
Konte(2014)); Religion (MacCauley and Gyomah-Boadi(2009)).

Data
Dependent variable: support for democracy

I
The Afrobarometer data contains series of national surveys on the

attitudes of citizens towards democracy, market, civil society, and other
aspects of development in Africa.
Round 4: 27.000 interviewees in 20 SSA countries in 2008.
Which of these three statements is closest to your opinion?

1. Democracy is preferable to any other kind of government.
2. In some circumstances, a non-democracy government can be
preferable.
3. For some like me, it does not matter what kind of government we
have.
4. I dont know.
(
1 if the individual i living in country j answers 1,
SDij =
0 otherwise

Data
Measuring remittances
How often, if at all, do you receive money remittances from friends or

relative outside of the country?
(
1 if the individual i living in country j receives it at least one,
remitij =
0 otherwise

Data
Measuring national priorities

I
If you had to choose, which one of the following things is the most
important national priority?
1. Giving people to say more in government decisions.
2. Protecting peoples right to live freely; 0 otherwise.
3. Maintaining order in the nation; 0 otherwise.
4. Improving economic conditions of people.
Rights is 1 if reply 1 or 2; Order is 1 if reply 3; Economy is 1 if the last

reply.
And which would be the next most important?

I
Right2, Order2 and Economic2.

Empirical Analysis
Methodology: standard Multilevel specification
Prob(SDij = 1, ij ) =
1
1 + exp(ij )
(4)
where,
ij = 0j + 1 remitij + 2 Xij + ij
(5)
0j = 0 + uj
(6)

Empirical Analysis
Remittances and Support for Democracy

Reference
No
Variable
remit
No formal
educ1
educ2
educ3
educ4
Male
Female
> 26
< 25 < 35
(1)
-0.116***
(0.0369)
0.216***
(0.0452)
0.566***
(0.0415)
0.708***
(0.0522)
0.944***
(0.0602)
-0.348***
(0.0278)
> 36
rural
urban
No
head
Observations
Number of country
27,352
20
(2)
-0.135***
(0.0374)
0.238***
(0.0468)
0.624***
(0.0448)
0.778***
(0.0565)
0.981***
(0.0649)
-0.323***
(0.0302)
0.113***
(0.0383)
0.304***
(0.0402)
0.107***
(0.0317)
-0.0185
(0.0340)
26,736
20
(3)
-0.164***
(0.0379)
0.200***
(0.0475)
0.540***
(0.0465)
0.652***
(0.0595)
0.821***
(0.0689)
-0.294***
(0.0307)
0.120***
(0.0387)
0.313***
(0.0406)
0.0515
(0.0338)
-0.0326
(0.0343)
26,422
20
(4)
-0.156***
(0.0385)
0.191***
(0.0481)
0.556***
(0.0472)
0.674***
(0.0604)
0.847***
(0.0699)
-0.297***
(0.0312)
0.0289
(0.0405)
0.189***
(0.0428)
0.0628*
(0.0343)
-0.00433
(0.0349)
26,022
20
** significant at 5%, * significant at 10%. Robust errors are in brackets.

Multilevel Mixture strategy
Unobserved categories of individuals?
Being a remittance-recipient decreases the probability of supporting

democracy.
Do all the individuals behave similarly?
There may exist different subtypes of individuals that share similar but
unobserved characteristics.
We now relax the hypothesis of the existence of a unique single equation

that links support for democracy and remittances.
we provide an analysis of the determinants of the subtypes of individuals

using the perception of the national priorities as potential determinants.


I
Recently developed for multilevel data structure (Asparouhov and Muthen

(2009); Henry and Muthen (2010))
Not yet widespread in social science.
Account for both country and individuals possible unobserved

heterogeneity.
Two classes: Gclass for the number of clusters for countries, and Cclass
for clusters at the individual level
The cluster of a country may have an impact on the cluster of an

individual living in this country.
Two individuals with similar background characteristics may be sorted in

different clusters because their countries belong to different clusters.

Specification
Prob(SDij = 1, ijGC ) =
1
1 + exp(ijGC )
(7)
where,
ij = 0j + 1C remitij + 2C Xij + ijC
(8)
0j = 0G + ujG
(9)
For a fixed value of G we estimate different models with different values

for C, and we move to the next G.
Selection of the optimal (C*;G*) using statistical criteria
Our best best model contains (2;6)

Multilevel Mixture: Remittances, Support for Democracy

and First National Priority
Reference
Variable
No
remit
No formal
educ1
educ2
educ3
educ4
Male
female
Constant
Class 1
(1 =0.73)
-0.2616**
(0.1175)
0.23**
(0.1153)
0.4091***
(0.1158)
0.5915***
(0.1803)
0.5984***
(0.2127)
-0.4143***
(0.1105)
1.1806***
(0.3093)
Class 2
(2 =0.27)
-0.0675
(0.1283)
0.393**
(0.1988)
1.1836***
(0.2022)
1.2962***
(0.227)
1.6478***
(0.2475)
-0.3758***
(0.0918)
-2.0926***
(0.2874)
Concomitant
Order
rights
Total observations
0.1148
(0.0870)
0.4632***
(0.0868)
25800

Remittances, Support for Democracy and National Priority

Reference
Variable
No
remit
No
educ1
educ2
educ3
educ4
Male
female
Concomitant
rights1
order2
rights2
Cluster 1
(1 =0.80)
-0.2074***
(0.0559)
0.1982***
(0.0618)
0.4403***
(0.062)
0.5735***
(0.0872)
0.6643***
(0.1021)
-0.3292***
(0.0465)
-
Cluster 2
(2 =0.20)
-0.1421
(0.1499)
0.537**
(0.2627)
1.4054***
(0.2875)
1.481***
(0.3092)
1.862***
(0.3305)
-0.3067***
(0.102)
-0.0558
(0.1416)
-0.3140***
(0.1155)
Cluster1
(1 =0.73)
-0.2432**
(0.1201)
0.2085*
(0.1201)
0.3797***
(0.1198)
0.551***
(0.1856)
0.5568**
(0.2199)
-0.4141***
(0.1164)
Cluster2
(2 =0.27)
0.0859
(0.1282)
0.3883*
(0.1999)
1.1538***
(0.2035)
1.2749***
(0.2277)
1.6292***
(0.2496)
-0.3653***
(0.0921)
0.466***
(0.0915)
0.0592
(0.0645)

Conclusion
Part II: Conclusion

I
Remittances effects on the quality of institutions: mixed results.
At the individual level: little is known for the African context
We have shown that such non-taxable income may hinder the much
needed legitimacy of democracy in this region if the individuals are more
concerned about the improvement of their economic conditions than their
rights and freedom.
Further research
I
Remittances and democracy in Africa: Short term versus long term
Panel data: the negative effect may disappear with time after
economic satisfaction.
Different rounds in the Afrobarometer but only one contains

information about remittances.

General conclusion
General Conclusion
I
The economic benefits of migration for the countries of origin are realized
primarily through the receipt of remittances.
Remittances are growing in many developing nations, surpassing

significant ODA.
Large amount of informal remittances inflows.
The global average cost of sending remittances continued its downward

trend in the third quarter of 2014, falling to 7.9 percent of the value sent
(WB(2014)).
Policies that are intended to increase the level of formal remittances have
the potential of increasing the level of growth rate for some countries,
including many SSA countries.
Towards another resource curse for democracy in Africa? It depends on

the degree to which freedom and rights are valued.
More remittances may increase the growth rate which may be translated
into a substantial improvement of the economic conditions of people.
Beneficial for the legitimacy of democracy?

General conclusion
Thank you for your attention!!!

Bedankt voor uw aandacht!!!

General conclusion
Classification
Table: Classification of countries

Gclass1
Cape Verde(1)
Ghana(1)
Kenya(1)
Liberia(0.99)
Malawi(1)
Mali(1)
Gclass2
Burkina Faso(1)
Nigeria(1)
Senegal(1)
liberia(0.01)
Nigeria(1)
Tanzania(1)
Zimbabwe(1)
Gclass3
Benin(1)
Botswana(1)
Uganda(1)
Zambia(1)
Gclass4
Mozambique(1)
Namibia(1)
South Africa(1)
Gclass5
Lesotho(1)
Gclass6
Madagascar(1)

General conclusion
Descriptive statistics
Country
Benin
Botswana
Burkina Faso
Cape Verde
Ghana
Kenya
Lesotho
Liberia
Madagascar
Malawi
Mali
Mozambique
Namibia
Nigeria
Senegal
South Africa
Tanzania
Uganda
Zambia
Zimbabwe
Remit
12.28
11.43
23.09
49.04
22.53
10.86
30.05
22.29
4.63
10.63
24.27
10.42
16.16
24.76
31.13
15.76
5.35
12.88
9.55
30.42

General conclusion
National priorities
Rights
Order
Economic
Total
First most important

24.95
16.49
58.57
100
Second most important

50.01
23.2
26.79
100

General conclusion
Goodness of fit
Class
Gclass
BIC
CAIC
1
2
3
4
5
6
2
3
4
5
6
2
3
4
5
6
2
3
4
5
6
2
3
4
5
6
6
2
3
4
5
2
3
4
5
1
1
1
1
1
1
2
2
2
2
2
3
3
3
3
3
4
4
4
4
4
5
5
5
5
5
6
6
6
6
6
7
7
7
7
30848.98
30951.42
31061.50
31194.89
31304.21
31395.99
29987.09
30091.19
30216.12
30366.78
30465.08
30351.13
29773.03
29945.95
30015.51
30135.61
29669.36
29718.65
29849.11
29953.14
30096.94
29637.59
29710.75
29852.72
29975.35
30110.69
30130.03
29626.83
29705.66
29834.05
2992.19
29644.09
29694.86
29836.19
30008.09
30869.98
30994.42
31126.50
31281.89
31413.21
31526.99
30032.09
30159.19
30307.12
30480.78
30602.08
30465.13
29844.03
30040.95
30134.51
30278.61
29718.36
29792.65
29948.11
30077.14
30245.94
29688.59
29787.75
29955.72
30104.35
30265.69
30291.03
29679.83
29785.66
29941.05
30126.19
29699.09
29777.86
29947.19
30147.09

Economic and Political Effects of Remittances in The Developing World

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