Workers' remittances and economic growth in China and Korea: an empirical analysis
Journal of Chinese Economic and Foreign Trade Studies
ISSN: 1754-4408
Article publication date: 28 September 2012
Abstract
Purpose
This purpose of this paper is to investigate the relationship between workers' remittances and economic growth in China and Korea.
Design/methodology/approach
This paper has employed annual time series data over the period of 1980 to 2009. Johansen and Jeuuselius's cointegration technique, error correction model, and sensitivity analysis have been performed to analyze the long‐run, short‐run relationships and robustness of the results, respectively.
Findings
Cointegration results confirm that there exists significant positive long‐run relationship between remittances and economic growth in Korea, while, significant negative relationship exist between remittances and economic growth in China. Error correction model confirms the significant positive short‐run relationship of workers' remittances with economic growth in Korea, while the results of China were insignificant in short run. Causality analysis confirms unidirectional causality runs from workers' remittances to economic growth, in both China and Korea. Sensitivity analysis confirms that the results are robust.
Practical implications
It is suggested that Korea should form friendly policies to ensure the continuous inflows of workers' remittances and their efficient utilization to ensure economic growth. On the other hand, China should keep an eye to reducing voluntary unemployment, which leads to decrease in productivity and growth in the country.
Originality/value
The paper provides some empirical evidence of whether workers' remittances have contributed significantly to large open economies.
Keywords
Citation
Tehseen Jawaid, S. and Raza, S.A. (2012), "Workers' remittances and economic growth in China and Korea: an empirical analysis", Journal of Chinese Economic and Foreign Trade Studies, Vol. 5 No. 3, pp. 185-193. https://doi.org/10.1108/17544401211263946
Publisher
:Emerald Group Publishing Limited
Copyright © 2012, Emerald Group Publishing Limited