Acta Universitatis Danubius. Œconomica, Vol 16, No 3 (2020)

Abstract

The paper investigated the determinants of remittances in transitional economies using panel data (1997 – 2014) with econometric estimation techniques such as fixed effects, random effects and the pooled OLS. The study found out that FDI and economic growth had a significant negative influence on remittances across all the three econometric estimation methods. Financial development and savings had a significant positive effect on remittances under the fixed and random effects and a significant negative impact on remittances under the pooled OLS approach. Another variable that was also found to have had a significant positive impact on remittances under both the fixed and random effects is inflation, consistent with available theoretical underpinnings. In summary, variables that were found to have a significant influence on remittances include FDI, economic growth, inflation, financial development and savings. Across all the three econometric estimation methods, human capital development and trade openness were found not to have any significant influence on remittances, a finding which contradicts available theoretical and empirical literature.