Why do migrants remit?

This paper examines primary incentives of remitting. Using estimated bilateral data on remittances, this paper demonstrates that a rise in the home (remittance‐receiving) country's gross national income (GNI) per capita leads to fewer remittances and that a rise in the host (remittance‐sending) country's GNI per capita motivates migrants to remit more. Real exchange rates and real interest rates have no effect on remittances. These results indicate that altruism is an important and critical component of motivations behind remittances. However, altruism alone does not appear to be a sufficient explanation of the motivations behind remittances. Other incentives such as loan repayment and investment play a non‐negligible role in this regard as well. The degree of altruism is higher for migrants from developing countries in comparison with migrants from developed countries, and it is higher when we define remittances as “personal transfers” rather than “personal transfers and compensation of employees.” The results of the vector error correction model show if remittances deviate from the equilibrium relationship, they will eventually revert.     

Identifying macro-determinants of remittance flows to a developing country: The case of Uganda

This paper employs minimum Lagrange Multiplier (LM) unit root tests for endogenous structural breaks combined with ARCH and GARCH models to investigate how key macrovariables impact diaspora remittances. Since remittances can reverse-cause exchange rate movements and domestic income, we use changes in the world price of oil denominated in U.S. dollars to proxy movements in the Uganda shilling nominal effective exchange rate. To control for endogenous bias between remittances and income, we use rainfall shocks as proxies for income shocks in a non-oil-producing developing economy dominated by agricultural sector and its related activities. In addition, large movements in oil price and rainfall shocks typically cause large supply shocks that can significantly impact size of remittance inflows. We control for interest rate differential, political business cycles and seasonality. Results indicate that accounting for structural change in intercepts (levels) and slopes (trends) of key macroeconomic determinants of remittances around their major structural break points significantly increases their explanatory power. In particular, positive (negative) innovations in income and depreciation (appreciation) in the currency of a recipient developing country are negatively (positively) correlated with remittance inflows. These results are robust across different model specifications.     

Determinants of workers’ remittances: An empirical investigation for a panel of eleven developing Asian economies

We explore the key motives of migrant workers’ remittances from abroad for 11 major Asian migrant‐sending countries. Using panel regressions, we find that relative higher growth rate, interest rate and capital market returns of home over the host, investment, financial deepening at home have significant impact on remittance inflows into Asia, along with higher per capita incomes and international crude oil prices. With incorporation of per capita incomes and lagged impact of remittances, we observe an emergence of consumption motives to remit. Therefore, we conclude that both investment and altruistic motives are the driving forces for remittances inflows into the Asian economies.     

Remittance Receipt and Business Ownership in the Dominican Republic

Using household‐level data from the Dominican communities in the Latin American Migration Project (LAMP‐DR7), we examine the links between remittance receipt and business ownership. We find that while the existence of a family business attracts remittance inflows, these monetary funds are associated with a reduced likelihood of business entrepreneurship. These results are consistent with various hypotheses regarding remittances and business investments. First, remittances may be motivated by the availability of investment opportunities in the home community. Second, remittances may respond to a bequest motive on the part of the emigrant, who may wish to lay claim on family assets when returning home. Lastly, remittances may cause an income effect that reduces family labour force participation and, correspondingly, the likelihood of family‐run business investments.     

Migrants’ Remittances and Financial Development: Macro‐ and Micro‐Level Evidence of a Perverse Relationship

Financial development is commonly identified as an important condition for fostering investment and economic growth. It is also believed that migrants’ remittances stimulate financial development in the receiving economy, contributing indirectly to economic growth. We explore the relationship between remittances and financial development using macro‐ and micro‐level data. From cross‐country panel data, we find evidence of a negative relationship between remittances and financial deepening in developing countries. Using household survey data from a study of migrants’ remittances in two CIS countries, Azerbaijan and Kyrgyzstan, we also investigate the relationship between remittances, financial intermediation and ‘financial literacy’ among remittance‐receiving households. While we find some evidence of a positive, albeit weak, relationship for Kyrgyzstan, in Azerbaijan, the relatively more financially developed economy, we uncover a strong perverse relationship. Remittances appear to deter bank intermediation and use of formal banking services. Possible reasons are explored and areas for further investigation identified.     

Do remittances spur economic growth? Evidence from developing countries

This paper provides original econometric evidence on whether international remittance transfers spur economic growth based on data for a sample of 49 developing countries during the period 2001-2013. Using Panel Smooth Transition Regression (PSTR), difference and system generalized methods of moment models, we find two main results. First, remittances have a positive and significant impact on economic growth in developing countries, while aid and foreign direct investments have insignificant impact. Secondly, as far as the nonlinear relationship is concerned, we find two extreme regimes with a sharp shift characterizing the remittance–growth relationship, with respect to conditional variables, where the remittances effects are positive and significant under the first regime and negative or insignificant under the second. Our findings suggest that the nonlinear relationship between remittances and growth mainly depends on financial development and investment, and less on remittance level and consumption.     

Cultural bridging and the performance of international joint ventures

The existing predictions and findings regarding the effect of cultural distance on the performance of international joint ventures (IJVs) remain inconsistent. We suggest that this inconsistency is due to the lack of conceptually differentiating the cultural distance between the firm’s home country and its partner(s)’country (home-partner country cultural distance) from the cultural distance between the firm’s home country and the location of the IJV (home-host cultural distance). We contribute to our understanding of IJVs by explicitly differentiating these two types of cultural distance, and by introducing the concept of cultural bridging. Cultural bridging relates to the proportion of home-host cultural distance that is compensated by having a joint venture partner, whose home country culture is more similar to the host country culture than the MNE’s home country culture is to the host country culture. We theorize how cultural bridging affects IJV performance and how it interacts with home-partner country cultural distance and home-host cultural distance to influence IJV performance. We test our hypotheses using a sample of 1708 IJVs. We find that cultural bridging has a positive influence on IJV performance, strengthens the positive performance effect of home-host cultural distance, and reduces the negative performance effect of home-partner country cultural distance. Our findings help make sense of some of the inconsistent findings regarding the role that cultural distance plays for IJV performance.     

非正规银行汇款方式——哈瓦拉

本文介绍了一种非银行汇款体系——哈瓦拉的简要情况。这种汇款方式在一些国家广泛使用，且被认为是一种合法的汇款经营方式。它较之银行汇款有很多优势，更易于被非法资金甚至正当经营的企业所使用。而政府在发现和防范哈瓦拉方面存在着相当大的难度，本文简要介绍了哈瓦拉的特点及国外在哈瓦拉监管方面的经验。     

Workers' remittances and Dutch Disease in Bangladesh

Workers' remittance is one of the major sources of foreign exchange earnings for Bangladesh in recent years. It accounted for 12% of GDP in 2009 and has colossal socio-economic implications for the country. However, the inflows of foreign exchange earnings can exert adverse effects on the international competitiveness of an economy as postulated by the Dutch Disease theory. Using Johansen Cointegration and Vector Error Correction Model and annual data from 1971 to 2008, this paper investigates the effects of remittances on the external trade competitiveness as measured by the movements of real exchange rate of the country. The results of the study suggest that the influx of workers' remittances significantly appreciates the real exchange rate and deteriorates the external trade competitiveness of Bangladesh. While increased terms of trade indicates similar adverse effects, openness in goods and capital markets and nominal devaluation improve the trade competitiveness of the country. Therefore, greater trade openness and channelling remittances to the priority investment projects can be powerful policy devices to improve the external competitiveness and avert ‘Dutch Disease' in Bangladesh.     

Remittances and FDI Effects on Economic Growth: A VECM and GIRFs for the Case of Albania

ABSTRACT

This paper analyzes the effects of remittances and foreign direct investments (FDI) on economic growth, gross fixed capital formation (GFCF), and inflation in Albania through a vector error correction model. The results show that remittances Granger-cause positively economic growth short- and long-run and negatively inflation, while no significant relationship has been established between remittances and GFCF. The findings support that remittances, apart from affecting economic growth, disinflate the Albanian economy. With respect to FDI, there are signs that inflation Granger-causes negatively FDI, while there appears to be no relationship between FDI, economic growth, and capital formation.     

The volatility effect of diaspora's location

Remittances can transmit volatility from host to home countries for some common patterns of diaspora's geographical distribution. In a migration portfolio model, the overall risk of volatility of any set of diaspora location is decomposed into a contagion and a concentration risks: a diaspora located in more volatile destinations induces a higher contagion risk, while a diaspora located in few destination countries increases the concentration risk. A series of estimations on a large panel of developing countries over 1995–2015 provide evidence for these two risks. Estimation of a structural model confirms that the geography of diaspora has an indirect impact on the origin country's aggregate instability through remittances.     

Knowledge Management in Central and Eastern Europe Through Network Development and Boundary Spanners

ABSTRACT

Central and Eastern European (CEE) countries have become a popular research venue due to their transitioning into market based economies. For international business scholars this represents a unique opportunity, as one of the key driving forces is the privatization of state-owned enterprises. Due to the market's great potential, many multinational enterprises are entering CEE countries and realizing that a transfer of market knowledge (i.e., customer tastes, distribution methods/channels, etc.) from the host country to the multinational, as well as from the multinational to the host country (i.e. technology, management/marketing capabilities, etc.), is essential.

The lack of host country skills have made knowledge transfer difficult. Also, the tacit nature of some of the most important knowledge embedded within the host country's organization and the multinational makes knowledge diffusion a daunting task to manage. However, successful knowledge management will assist in positive performance measures so researchers are examining knowledge management and its constructs (acquisition, transfer, conversion, and application).

Our research explores the linkage between knowledge management and performance in host country firms in a CEE country, Croatia. We also explored antecedents of successful knowledge management that of networks and human resources (boundary spanners). Finally we explored whether cultural distance moderates these relationships in the knowledge management process.     

Remittances in Mexico and their unobserved components

ABSTRACT

The present study aims to determine the common trends and the permanent and transitory components of remittances received by Mexican households. This is done by estimating a small Dynamic Factor Model (DFM), using the approach first proposed by Gonzalo and Granger [1995. “Estimation of Common Long-memory Components in Cointegrated Systems.” Journal of Business and Economic Statistics 13 (1): 27–35], determining the number of common trends subject to the cointegration results. The study also shows the similarities between this small DFM with respect to large DFM, which are widely used in the econometric literature. The results indicate the presence of one cointegration relationship. Consequently, there are four common trends. The cointegration relationship is negatively dominated by Mexico's economic activity and positively by the US industrial production. The effects of the exchange rate and the US unemployment rate are positive, but less relevant. This economic scenario leads to remittances exceeding its permanent component.     

Union legislation and export platform FDI

Abstract

This paper examines Foreign Direct Investment in the presence of labour unions. An oligopoly model is developed in which identical firms locate in a host country in order to export to a foreign country. These firms are unionized and compete with foreign firms on the foreign market. We consider the incentives for social dumping via restrictive labour legislation, which we assume can be used by the host country government to affect the bargaining power of unions. We ask whether it is in the interest of the importing foreign country for the host country to relax or to tighten labour laws.     

Choice of Exchange Rate Regime in a Selection of African Countries

Abstract

An exchange rate regime has an important impact on macroeconomic policies within developing countries and therefore essential in macroeconomic policy formation. The main research question is to determine how the variety of determinants would influence the exchange rate regime choice for a selection of 19 African developing countries. A distinction is made between three groups of variables, namely economic fundamentals, economic stabilization aspects and currency crises factors, all affecting a country’s exchange regime choice. The probability of these determinants is then estimated to establish whether the selected countries would choose a fixed, an intermediate or a flexible exchange regime.     

Are the Direct and Indirect Growth Effects of Remittances Significant?

Development economists believe that migrant workers’ remittances are an important source of funds for long‐run growth. Therefore, recent studies have investigated the growth effects of remittances but reached different conclusions. In these studies, the rate of growth of output is simply regressed on both remittances and the channels through which remittances affect growth. Thus, no distinction has been made between the indirect and direct growth effects of remittances. Such regressions may give unreliable estimates because the channels may also capture some growth effects of remittances, making the growth effects of remittances insignificant. In this study, we make a distinction between the indirect and direct growth effects of remittances. Our model is estimated with panel data of 40 high remittance recipient countries with the system generalized method of moment. We found that remittances have no direct growth effects but they have small indirect growth effects.     

How Much More (or Less) Is a Brand Worth When Made in a Low Labor-Cost Country? It Depends Upon Who and Where You Ask

ABSTRACT

This multinational adaptive conjoint study measures how much more, or less, consumers might be willing to pay for different brand/manufacturing country combinations. Chinese, South Korean, and US respondents were asked about their preferences for laptop computers carrying different combinations of price, country of manufacture (CM), and country of brand (CB) cues. For all three respondent groups, price was the most salient attribute, followed by country of manufacturing, and then CB. Nonetheless, respondents from different countries differed in their preferences for price/country of manufacturing/brand combinations. The findings suggest that brands having both positive CB and CM images can charge premium prices in their home countries and abroad. Brands with weaker CB and CM images may enjoy home court advantages domestically; however, they may have to price their products lower when competing in countries with stronger CM and CB reputations.     

The interplay between home and host country institutions in an emerging market context: Private equity in Latin America

This study examines how the interplay between home and host country regulatory institutions affects the investment strategy of private equity (PE) firms in an emerging market context. To answer this question, we consider three different mechanisms: (1) the institutional hazard avoidance effect, (2) the institutional escapism effect, and (3) the dysfunctional institutions effect. Contrary to conventional wisdom, we argue that regulatory institutional differences between home and host countries can sometimes have a positive rather than a negative effect on investment likelihood. Our findings show that when a host emerging market has a strong regulatory institutional system relative to other emerging markets, it is more likely that this country will attract PE investments from firms based in home countries with very strong and very weak institutional systems. The empirical analyses, based on a polynomial specification and a dataset covering more than 300 PE firms that made close to 1500 investment transactions in Latin America during 1996–2011, are consistent with our main theoretical arguments.     

Engaging diasporas as international entrepreneurs in developing countries: In search of determinants

Diaspora has been increasingly recognized by practitioners and scholars as an important factor of development in developing economies. Through their remittances and expertise, diaspora members have become an important source of foreign direct investment and managerial capabilities. Although the literature is glutted with examples of the impact of diaspora in fostering international entrepreneurship and reducing poverty, a theoretical foundation and framework is needed to explain this impact. This study explores a theoretical foundation of the diaspora entrepreneurship. A framework identifying the determinants of the diaspora’s international new venture creation in the country of origin is developed. The study suggests that diaspora international entrepreneurship depends on the level of altruistic motivation, need of social recognition, entrepreneurial opportunities, friendliness and receptivity of the home country, as well as integration of and support to immigrants in the host countries. Propositions for diaspora entrepreneurship are developed.     

On the Irrelevance of Mercosur: Evidence From Foreign Direct Investment

ABSTRACT

This article utilizes data from more than 100 countries over 30 years to identify the key factors that make a country more attractive to foreign direct investment (FDI). We find evidence that a country's potential marginal returns to capital, available infrastructure, degree of trade openness, labor force qualification, and macroeconomic stability have a positive impact on FDI inflows. Our estimates capture a change in the role played by trade protection and an increase in the importance of human capital as globalization progressed. An application of our models illustrates why Mercosur countries have underperformed their peers in attracting FDI.