Determining factors and consequences of migrant worker remittances

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To the knowledge of the researcher, there is no study which investigates these issues. Although Osili (2006) identified the three types of the emigrant’s savings, he has not tested the factor such as return on the investment to evaluate the emigrant decision for remitting or assess the flow for remittances from the host country perspective. For example, a number of countries do offer incentives to emigrants to invest in the country instead of sending money back home. China is such an example. It offers substantial tax breaks and infrastructure support to emigrants. Saudi Arabia currently offers incentives that could encourage the emigrant to have some savings or investments via bank portfolios. Therefore, the current research will contribute to the existing literature to test the hypothesis if whether remittance flows from GCC countries can be affected by return on investment. Billmeier and Massa’s (2009) provided not only evidence on how the remittances and institutions that support the stock market including savings in the banks and investment in the portfolios , but also they provided some evidence on how the oil prices impact the remittances flows. Therefore, leading to economic growth including monetary development. Billmeier and Massa (2009) studied 17 emerging markets in the Middle East and Central Asia, including both oil rich countries and economies without sizeable natural resource wealth to assess how remittances and institutions respond in two different regions. They found that in non-oil rich countries both institutions and remittances have a positive and significant impact on market capitalization. In oil rich countries, stock market capitalization is mainly driven by the oil price because the oil revenues advance the level of remittance flows, which in turn leads to improvement in financial developments (Fasano and Iqbal, 2003). 32
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Therefore, the oil prices or oil revenues have been also tested as a macroeconomic indicator to increase or decrease the remittance flows. The oil prices or oil revenues can influence the level of remittance flows from the host country. This study therefore boosts the existing literature since the research investigates the macroeconomic determinants’ of workers’ remittances such as size of the economy from sending country to receiving country, exchange rates, income rate, rate of return to investment and an inflation rate. This research study aims to help fill this gap and shed some light on remittance flows from GCC countries to other countries. The literature on remittances tends to be focused on the effects of remittances on the receiving countries. Quite limited studies have been conducted to analyse the effects of remittances on the remitting countries. The remittances literature is limited in its impact on the economies of the destination countries, many of which are the oil rich Middle East nations. The aim of this study is to shed some light on remittances’ effect on the remitting
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  • Fall '15
  • PROFESSOROKWIRI
  • Inflation, ........., Human migration, Gulf Cooperation Council

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