The Effect of Remittance on Human Development in the Organization of Islamic Cooperation Member Countries: Evidence from DCCE AND CS-ARDL

Document Type : Research Paper


1 Faculty of Business and Management, Universiti Sultan Zainal Abidin, 21300 Kuala Terengganu, Malaysia

2 Faculty of Maritime Study, Universiti Malaysia Terengganu, Malaysia


This study examined the effect of remittance inflows on human development in the Organization of Islamic Cooperation (OIC) member countries from 1990 to 2018. The study applied second-generation techniques. Based on the results of the second-generation unit roots test, our variables had mixed stationarity. In addition, the result of the Westerlund cointegration technique showed that long-run relationships exist among the variables. In addition, the long-run and short-run coefficients from Dynamic Common Correlated Effects (DCCE) and Cross-Sectional Autoregressive Distributive Lags (CS-ARDL) techniques revealed that remittances inflows promote human development. Moreover, it was revealed that financial development and foreign direct investment inflows positively impact human development, while the short-run coefficients were statistically insignificant. The causality test results showed a unidirectional causal link between remittance inflows and human development and between financial development and human development. In contrast, a bidirectional causal link was demonstrated between foreign direct investment and human development. Therefore, the study concluded that remittance inflows promote human development in OIC member countries. The policymakers in OIC should consider policies that will attract migrant workers to send remittances to their home country.


Main Subjects

Article Title [فارسی]

اثر وجوه حواله ای روی توسعه انسانی در کشورهای عضو سازمان همکاری سازمان: شواهدی مبتنی بر DCCE و CS-ARDL

Authors [فارسی]

  • کبیرو کامالو 1
  • وان حکیمه بنت وان ابراهیم 1
  • علی عمر احمد 2
1 دانشکده بازرگانی و مدیریت، دانشگاه سلطان زین العابدین، کوالا ترنگانو، مالزی
2 دانشکده مطالعات دریایی، دانشگاه مالزی ترنگانو، مالزی
Abstract [فارسی]

هدف از این مطالعه بررسی اثر جریان ورودی وجوه حواله ای روی توسعه انسانی در کشورهای عضو سازمان همکاری اسلامی بین سال های 1990 تا 2018 بود. به این منظور از تکنیک های نسل دوم استفاده شد. طبق نتایج آزمون نسل دوم ریشه واحد، متغیرهای پژوهش ماندگاری مرکب داشتند. به علاوه، نتایج تکنیک همگرایی وسترلاند نشان داد که روابط طولانی مدتی بین متغیرها وجود دارد. همچنین ضرایب بلندمدت و کوتاه مدت اثرات همبسته مشترک پویا (دی سی سی ایی) و وقفه های توزیعی اتورگرسیو مقطعی (سی اس-ای آر دی ال) نشان دادند که ورود وجوه حواله ای، توسعه انسانی را تقویت می کند. به علاوه، نشان داده شد که توسعه مالی و ورود سرمایه گذاری خارجی مستقیم به شکل مثبتی بر توسعه انسانی اثر می گذارند، در حالی که ضرایب کوتاه مدت از نظر آماری معنادار نبودند. نتایج آزمون علیت نشان داد که روابط علّی یک طرفه بین ورود وجوه حواله ای و توسعه انسانی و همچنین بین توسعه مالی و توسعه انسانی وجود دارد، در حالی که بین سرمایه گذاری خارجی مستقیم و توسعه انسانی یک رابطه علّی دوطرفه به دست آمد. بنابراین، این مطالعه به این نتیجه رسید که ورود وجوه حواله ای، توسعه انسانی در کشورهای عضو سازمان همکاری اسلامی را تقویت می کند. در آخر، به سیاستگذاران سازمان همکاری اسلامی توصیه می شود سیاست هایی برای جذب آن دسته از کارگران مهاجر اجرا کنند که وجوه حواله ای به کشورهای مبدأشان  می فرستند.

Keywords [فارسی]

  • اثرات همبسته مشترک پویا
  • وقفه های توزیعی اتورگرسیو مقطعی
  • توسعه انسانی
  • وجوه حواله ای
Abor, J. Y., Amidu, M., Sarpong-Kumankoma, E., & Issahaku, H. (2021). African Banking Sector Development: The Roles of Remittances and Monetary Policy. African Finance Journal23(1), 20-40.
Adam, M., Hassan, A., Ahmad, A. U., Aliyu, I., & Daiyabu, A. (2021). Financial instability and the state of environmental quality in Nigeria. International Journal of Business8(5), 318-331.
Adams, R. H. (2011). Evaluating the economic impact of international remittances on developing countries using household surveys: A literature review. Journal of Development Studies, 47(6), 809–828.
Ahmad, A. U., Abdallah, A., Sulong, Z., & Abdullahi, A. T. (2015b). An autoregressive distributive lag for the analysis of macroeconomic variables on stock market returns in Nigeria. Advances in Environmental Biology, 481-502.
Ahmad, A. U., Abdullah, A., Abdullahi, A. T., & Muhammad, U. A. A. (2015a). Stock market returns and macroeconomic variables in Nigeria: Testing for dynamic linkages with a structural break. Scholars Journal of Economics, Business and Management2(8A), 816-28.
Ahmad, A. U., Abdullah, A., Sulong, Z., & Abdullahi, A. T. (2015c). The review of stock returns and macroeconomic variables. International Journal of Academic Research in Business and Social Sciences5(5), 2222-6990.
Ahmad, A. U., Abdullah, A., Sulong, Z., & Abdullahi, A. T. (2015d). Causal relationship between stock market returns and macroeconomic variables in Nigeria. IOSR Journal of Humanities and Social Science20(5), 74-96.
Ahmad, A. U., Abdullah, A., Sulong, Z., & Abdullahi, A. T. (2015e). The review of stock returns and macroeconomic variables. International Journal of Academic Research in Business and Social Sciences5(5), 2222-6990.
Ahmad, A. U., Loganathan, N., Ismail, S., Streimikiene, D., Mardani, A., & Golam Hassan, A. A. (2018). Financial instability, trade openness, and energy prices on leading African countries sustainable growth. Economic Computation and Economic Cybernetics Studies and Research, 52(1), 127–142.
Ahmad, A. U., Umar, M. B., Dayyabu, S., Ahmad, U. G., & Danlami, M. R. U. (2015f). Impact of macroeconomic variables on stock market development in Nigeria: Empirical evidence with known structural break. Scholars Journal of Economics, Business and Management2(10A), 971-994.
Akanle, O., Kayode, D., & Abolade, I. (2022). Sustainable development goals (SDGs) and remittances in Africa. Cogent Social Sciences8(1), 1-17.
Albert, J. R. G., & Vizmanos, J. F. V. (2020). Vulnerability to Income Poverty in the Philippines: An Examination of Trends from 2003 to 2015. 1(1), 1-70.
Alkhawaldeh, B. Y., Mahmood, S., & Jakada, A. H. (2020). An Empirical Assessment of the Effect of Taxes and Interest Rate on Economic Growth in Jordan: An Application of Dynamic Autoregressive-Distributed Lag. Research in World Economy. 11(3), 1-7
Alkousini, E. M. (2020). The Role of Workers' Remittances and Their Interaction with Physical and Human Capital in Stimulating Economic Growth in Jordan (1979-2015). International Journal of Business and Economics Research9(5), 354-363.
Amrith, M. (2022). The Temporal Borders of Transnational Belonging: Aging Migrant Domestic Workers in Singapore. American Behavioral Scientist, 1(1), 1-16.
Aregbeshola, R. A. (2022). Interplay of poverty, remittances and human capital development: Panel evidence from selected Sub‐Saharan African countries. International Migration. 1(1), 1-20
Asongu, S., & Nting, R. (2021). The role of finance in inclusive human development in Africa revisited. Journal of Economic and Administrative Sciences, 6-35
Atiku, A. M., Ismail, S., & Ahmad, A. U. (2021). Energy Trade Amidst Sustainable Economic Growth in Regional Cooperation of West African States: Fresh Evidence from Panel CS-ARDL. International Journal of Energy Economics and Policy11(6), 262.
Azizi, S. S. (2018). The impacts of workers’ remittances on human capital and labour supply in developing countries. Economic Modelling, 75(July), 377–396.
Berloffa, G., & Giunti, S. (2019). Remittances and healthcare expenditure: Human capital investment or responses to shocks? Evidence from Peru. Review of Development Economics23(4), 1540-1561.
Boccagni, P., & Pérez Murcia, L. E. (2021). Fixed places, shifting distances: remittance houses and migrants’ negotiation of home in Ecuador. Migration Studies9(1), 47-64.
Borja, K. (2020). Remittances, corruption, and human development in Latin America. Studies in Comparative International Development55(3), 305-327.
Breusch, T. S., & Pagan, A. R. (1980). The Lagrange multiplier test and its applications to model specification in econometrics. The review of economic studies47(1), 239-253.
Brown, R. P. C., & Poirine, B. (2005). A model of migrants’ remittances with human capital investment and intrafamilial transfers. International Migration Review, 39(2), 407–438.
Chudik, A., & Pesaran, M. H. (2015). Common correlated effects estimation of heterogeneous dynamic panel data models with weakly exogenous regressors. Journal of Econometrics, 188(2), 393–420.
Dabachi, U. M., Mahmood, S., Ahmad, A. U., Ismail, S., Farouq, I. S., Jakada, A. H., Mustapha, U. A., Abdullahi, A. T., Muhammad, A. A., & Kabiru, K. (2020). Energy consumption, energy price, environmental degradation intensity, and economic growth nexus in African OPEC countries: Evidence from simultaneous equations models. Journal of Environmental Treatment Techniques, 8(1), 403–409.
Dahliah, D., & Nur, A. N. (2021). The Influence of Unemployment, Human Development Index and Gross Domestic Product on Poverty level. Golden Ratio of Social Science and Education1(2), 95-108.
Dumitrescu, E. I., & Hurlin, C. (2012). Testing for Granger non-causality in heterogeneous panels. Economic Modelling, 29(4), 1450–1460.
Eberhardt, M., & Presbitero, A. F. (2015). Public debt and growth: Heterogeneity and non-linearity. Journal of international Economics, 97(1), 45-58.
Emara, A. M., & Mohamed, N. M. A. (2021). Global economic fluctuations and human development: How is the impact transmitted in Egypt? Review of Economics and Political Science, 1-21
Ghosh, T., & Parab, P. M. (2021). Assessing India’s productivity trends and endogenous growth: New evidence from technology, human capital and foreign direct investment. Economic Modelling97(8), 182-195.
Gumede, V. (2021). Revisiting poverty, human development and inequality in democratic South Africa. Indian Journal of Human Development15(2), 183-199.
Gyimah-Brempong, K., & Asiedu, E. (2015). Remittances and investment in education: Evidence from Ghana. Journal of International Trade and Economic Development, 24(2), 173–200.
Huay, C. S., Winterton, J., Bani, Y., & Matemilola, B. T. (2019). Do remittances promote human development? Empirical evidence from developing countries. International Journal of Social Economics. 18(4), 1-13.
Imran, K., Cheok, C. K., & Devadason, E. S. (2018). Foreign Remittances and household-based human development. Academy of Accounting and Financial Studies Journal, 22(2), 1–7.
Jakada, A. H., & Mahmood, S. (2020). An asymmetric effect of economic growth, foreign direct investment, and financial development on the quality of the environment in Nigeria. The Journal of Management Theory and Practice (JMTP), 5-13.
Jakada, A. H., Mahmood, S., Ahmad, A. U., & Bambale, S. A. (2020). Heterogeneous moderating influence of economic growth on financial development and environmental quality in Africa. Journal of Critical Reviews7(14), 1-7.
John, J. I., Orok, A. B., & Udoka, C. O. (2020). Migrant remittances and economic growth: The Nigerian perspective. International Journal of Scientific Engineering and Science4(1), 52-57.
Kadozi, E. (2019). Research in globalization remittance inflows and economic growth in Rwanda. Research in Globalization, 1, 1–15.
Kamalu, K., Wan Ibrahim, W. H., Ahmad, A. U., & Mustapha, U. A. (2019). The causal link between financial developments, financial inclusion, and economic growth in Nigeria. International Journal of Scientific & Technology Research8(12), 1-7
Kangmennaang, J., Bezner-Kerr, R., & Luginaah, I. (2017). Impact of migration and remittances on household welfare among rural households in Northern and Central Malawi. Migration and Development, 7(1), 55–71.
Kausar, F., Sarwar, S., Rafiq, M. Y., Ali, R., & Rehman, R. U. (2019). Integrating migration, human development and remittances: an analysis of SAARC countries. International Journal of Happiness and Development, 5(2), 115-140.
Matuzeviciute, K., & Butkus, M. (2016). Remittances, development level, and long-run economic growth. Economies, 4(4), 28.
Meyer, D., & Shera, A. (2017). The impact of remittances on economic growth: An econometric model. Economia, 18(2), 147–155.
Mlambo, C., & Kapingura, F. (2020). Remittances and economic development: Evidence from SADC countries. Eurasian Journal of Economics and Finance8(4), 261-273.
Mohammed, U. (2021). Remittances, institutions and human development in Sub-Saharan Africa. Journal of Economics and Development. 8(1); 1-16
Mozumdar, L., & Islam, M. A. (2013). Effects of remittances on human capital development: An empirical analysis. The Bangladesh Journal of Agricultural Economics, 2, 1–18.
Navita, & Pal, R. (2022). Analyzing determinants of remittances with endogenous migration decision: evidence from India. Migration and Development, 11(1), 101-125.
Noushad, A. P., Parida, J. K., & Raman, R. K. (2020). Low-skilled emigration, remittances and economic development in India. Migration and Development, 7(1), 1-31.
Nurse, K. (2018). Migration, diasporas, remittances and the sustainable development goals in least developed countries. Journal of Globalization and Development, 9(2), 1-19.
Pesaran MH (2007) A simple panel unit root test in the presence of cross-section dependence. J Appl Econ 22(2): 265–312
Pesaran, M. H. (2004) General diagnostic test for cross section dependence in panels, Cambridge Working Papers in Economics, No. 0435, Faculty of Economics, University of Cambridge.
Pesaran, M. H. (2015). Testing weak cross-sectional dependence in large panels. Econometric Reviews, 34(6–10), 1089–1117.
Pesaran, M. H., & Yamagata, T. (2008). Testing slope homogeneity in large panels. Journal of Econometrics, 142(1), 50–93.
Rapoport, H., & Docquier, F. (2006). The economics of migrants' remittances. Handbook of the economics of giving, altruism and reciprocity, 2, 1135-1198.
Sahoo, M., & Sethi, N. (2020). Does remittance inflow promote human development in sub-Saharan Africa? An empirical insight. Global Economy Journal, 20(04), 1-23.
Sami, M., & El-Aziz, A. (2018). The Impact of remittances on children’s educational attainment: evidence from Egypt. SocioEconomic Challenges2(2), 1-11
Sen, A. (1994). Capability and wellbeing (1st ed.). Cambridge University Press.
SESRIC (2019). OIC economic outlook 2019: Mobilizing financial resources for development.
Sghaier, I. M. (2021). Foreign Financial Flows, Human Capital and Economic Growth in North African Countries. Economic Alternatives, 8(3), 355-371.
Shelton, A. C. (2021). Migrants' remittances, financial development, and economic growth (Doctoral dissertation, KDI School).
Sobiech, I. (2019). Remittances, finance and growth: Does financial development foster the impact of remittances on economic growth?. World Development113, 44-59.
Streeten, P. (1994). Human development : Means and ends. American Economic Review, 84(2), 232–237.
Swamy, P. A. V. B. (1970). Efficient inference in a random coefficient regression model. Econometrica, 38(1), 311–323.
Umar, M. B., Dayyabu, S., Gambo, A., Danlami, M., & Ahmad, A. (2015). An empirical study on the relationship between financial intermediaries and economic growth in Nigeria: A cointegration and causality analysis. Journal of Economics and Finance. Volume6(4), 15-31
Üstubuci, A., & Irdam, D. (2012). The impact of remittances on human development: A quantitative analysis and policy implications. Economics and Sociology, 5(1), 74–95.
WDI, (2020). World Development Indicators.
Westerlund, J. and D. L. Edgerton (2007). A simple test for cointegration in dependent panels with structural breaks. Oxford Bulletin of Economics and Statistics 70(5), 665–704.