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FDI or Remittances for Sustainable External Financial Inflows. Theoretical Delimitations and Practical Evidence using Granger Causality

Author

Listed:
  • Valentina VASILE

    (Institute of National Economy, Romanian Academy.)

  • Daniel ŞTEFAN

    („G.E.Palade” University of Medicine, Pharmacy, Sciences and Technologies of Târgu Mureș; Institute of National Economy, Romanian Academy.)

  • Călin-Adrian COMES

    („G.E.Palade” University of Medicine, Pharmacy, Sciences and Technologies of Târgu Mureș; Institute of National Economy, Romanian Academy.)

  • Elena BUNDUCHI

    („G.E.Palade” University of Medicine, Pharmacy, Sciences and Technologies of Târgu Mureș; Institute of National Economy, Romanian Academy.)

  • Anamari-Beatrice ŞTEFAN

    („G.E.Palade” University of Medicine, Pharmacy, Sciences and Technologies of Târgu Mureș.)

Abstract
FDI and remittances are important sources of economic growth, depending both on national push policies and on the individuals’ and companies’ interests. The problem approached in this paper is the extent to which FDI inflows in migrant origin countries influence the level, dynamics and sustainability of the remittances received by the households, and whether or not the level of economic development has importance in politicy measures differenciation in the analyzed period (1996-2019). In the present study, based on Dumitrescu-Hurlin Panel Granger causality approach, we highlight to what extent the level of development of the origin country influences the employment decision, namely external mobility for work or employment in the FDI companies. Studying the dependence between FDI stock dynamics and remittances inflows evolution in beneficiary countries, we point: (1) if the attractiveness for FDI in the origin country attenuates the dynamics of the external mobility of the working age population, (2) to which extent a country's GDP/capita level influence the attractiveness for FDI inflows and the level of remittances sent by migrants in the origin countries (3) if the advancement index of the FDI stock dynamics relative to the remittances inflows can be appreciated as a marker for policy measures differentiation in the field of labour market for retaining human capital.

Suggested Citation

  • Valentina VASILE & Daniel ŞTEFAN & Călin-Adrian COMES & Elena BUNDUCHI & Anamari-Beatrice ŞTEFAN, 2020. "FDI or Remittances for Sustainable External Financial Inflows. Theoretical Delimitations and Practical Evidence using Granger Causality," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 131-153, December.
    • Handle: RePEc:rjr:romjef:v::y:2020:i:4:p:131-153
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    economic growth; FDI; remittances; Dumitrescu-Hurlin Granger Panel causality;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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