The Middle East and North Africa (MENA) region is, at the same time, a major source and a major recipient of remittances, which could have significant implications on the economic and social developments of the region. The purpose of this paper is to analyse the socio-economic effects of the large remittance inflows in 12 remittance-dependent MENA countries.
This study uses the vector autoregressive model and Granger causality test on the entire set of labour-exporting MENA countries, and covers the period 1991-2015. It also exploits nine (dependent) variables that represent the economic developments, external balance, employment, and the potential uses of remittances in these countries.
The study shows a positive and significant impact running from remittances to gross domestic product and household expenditures. On the other hand, the authors found that an increase in inflation or a decline in economic conditions result in a considerable increase in remittance inflows, proving the counter-cyclical nature of these transfers.
In addition of examining an understudied region, the paper provided many interesting concepts regarding the form of association between remittances and receiving countries’ economic conditions, and the relationship dynamics between remittances on one hand and several macro-economic and social variables on the other.
