Analysis of Economic Development Impact of Remittances on Recipient (Zimbabwe) and Remitting (South Africa) Countries

George Chirwa; Abdulla Kader

doi:doi:10.11648/j.jbed.20180303.13

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Analysis of Economic Development Impact of Remittances on Recipient (Zimbabwe) and Remitting (South Africa) Countries

George Chirwa, Abdulla Kader

Published in Journal of Business and Economic Development (Volume 3, Issue 3)

Received: 20 August 2018 Accepted: 29 October 2018 Published: 21 November 2018

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Abstract

The importance of remittances to recipient economies has been greatly researched and there is a general consensus around their continued significance to these countries. However, their impact on the development of the receiving economies remains a subject of much debate among academics and policy makers. There is even greater dearth of academic research and debate around the impact of remittances on the sending economies. Unlike Foreign Direct Investment (FDI) flows, whose impact on the economies can be closely correlated to the economies’ outputs, remittances are micro-payments fragmented to multiple recipients, from multiple individual senders with different motives and for a multitude of uses. The researcher modified The Newtonian Gravity model first adapted by a Dutch economist, Timbergen as the first published proponent of the Newtonian gravity model application in analysis of financial flows. The model was applied to remittance flows between the sender and recipient countries, and assess the economic impact on the two economies. The key corridor of the research was between Zimbabwe and South Africa, which represents one of the biggest regional remittances flow corridors in Africa. The investigation revealed that remittances not only had a significant impact on recipient economies, but showed a negative correlation with Zimbabwe’s GDP in particular. Outflows of remittances proved to have very little impact on the sending country, South Africa. On further examination of the other countries studied, distance from the main remitting country had a negative correlation with remittances flows. Economic impairment of receiving countries increased their dependency on the remittances flows, and the funds were not directed at activities that directly contributed to GDP growth of recipient countries.

Published in	Journal of Business and Economic Development (Volume 3, Issue 3)
DOI	10.11648/j.jbed.20180303.13
Page(s)	77-85
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2018. Published by Science Publishing Group

Keywords

Remittances, Economic Development, Gravity Model

References

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APA Style

George Chirwa, Abdulla Kader. (2018). Analysis of Economic Development Impact of Remittances on Recipient (Zimbabwe) and Remitting (South Africa) Countries. Journal of Business and Economic Development, 3(3), 77-85. https://doi.org/10.11648/j.jbed.20180303.13

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ACS Style

George Chirwa; Abdulla Kader. Analysis of Economic Development Impact of Remittances on Recipient (Zimbabwe) and Remitting (South Africa) Countries. J. Bus. Econ. Dev. 2018, 3(3), 77-85. doi: 10.11648/j.jbed.20180303.13

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AMA Style

George Chirwa, Abdulla Kader. Analysis of Economic Development Impact of Remittances on Recipient (Zimbabwe) and Remitting (South Africa) Countries. J Bus Econ Dev. 2018;3(3):77-85. doi: 10.11648/j.jbed.20180303.13

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@article{10.11648/j.jbed.20180303.13,
  author = {George Chirwa and Abdulla Kader},
  title = {Analysis of Economic Development Impact of Remittances on Recipient (Zimbabwe) and Remitting (South Africa) Countries},
  journal = {Journal of Business and Economic Development},
  volume = {3},
  number = {3},
  pages = {77-85},
  doi = {10.11648/j.jbed.20180303.13},
  url = {https://doi.org/10.11648/j.jbed.20180303.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jbed.20180303.13},
  abstract = {The importance of remittances to recipient economies has been greatly researched and there is a general consensus around their continued significance to these countries. However, their impact on the development of the receiving economies remains a subject of much debate among academics and policy makers. There is even greater dearth of academic research and debate around the impact of remittances on the sending economies. Unlike Foreign Direct Investment (FDI) flows, whose impact on the economies can be closely correlated to the economies’ outputs, remittances are micro-payments fragmented to multiple recipients, from multiple individual senders with different motives and for a multitude of uses. The researcher modified The Newtonian Gravity model first adapted by a Dutch economist, Timbergen as the first published proponent of the Newtonian gravity model application in analysis of financial flows. The model was applied to remittance flows between the sender and recipient countries, and assess the economic impact on the two economies. The key corridor of the research was between Zimbabwe and South Africa, which represents one of the biggest regional remittances flow corridors in Africa. The investigation revealed that remittances not only had a significant impact on recipient economies, but showed a negative correlation with Zimbabwe’s GDP in particular. Outflows of remittances proved to have very little impact on the sending country, South Africa. On further examination of the other countries studied, distance from the main remitting country had a negative correlation with remittances flows. Economic impairment of receiving countries increased their dependency on the remittances flows, and the funds were not directed at activities that directly contributed to GDP growth of recipient countries.},
 year = {2018}
}

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TY  - JOUR
T1  - Analysis of Economic Development Impact of Remittances on Recipient (Zimbabwe) and Remitting (South Africa) Countries
AU  - George Chirwa
AU  - Abdulla Kader
Y1  - 2018/11/21
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N1  - https://doi.org/10.11648/j.jbed.20180303.13
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T2  - Journal of Business and Economic Development
JF  - Journal of Business and Economic Development
JO  - Journal of Business and Economic Development
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EP  - 85
PB  - Science Publishing Group
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UR  - https://doi.org/10.11648/j.jbed.20180303.13
AB  - The importance of remittances to recipient economies has been greatly researched and there is a general consensus around their continued significance to these countries. However, their impact on the development of the receiving economies remains a subject of much debate among academics and policy makers. There is even greater dearth of academic research and debate around the impact of remittances on the sending economies. Unlike Foreign Direct Investment (FDI) flows, whose impact on the economies can be closely correlated to the economies’ outputs, remittances are micro-payments fragmented to multiple recipients, from multiple individual senders with different motives and for a multitude of uses. The researcher modified The Newtonian Gravity model first adapted by a Dutch economist, Timbergen as the first published proponent of the Newtonian gravity model application in analysis of financial flows. The model was applied to remittance flows between the sender and recipient countries, and assess the economic impact on the two economies. The key corridor of the research was between Zimbabwe and South Africa, which represents one of the biggest regional remittances flow corridors in Africa. The investigation revealed that remittances not only had a significant impact on recipient economies, but showed a negative correlation with Zimbabwe’s GDP in particular. Outflows of remittances proved to have very little impact on the sending country, South Africa. On further examination of the other countries studied, distance from the main remitting country had a negative correlation with remittances flows. Economic impairment of receiving countries increased their dependency on the remittances flows, and the funds were not directed at activities that directly contributed to GDP growth of recipient countries.
VL  - 3
IS  - 3
ER  -

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Author Information

George Chirwa

Department of Leadership, University of Kwazulu Natal, Durban, South Africa
Abdulla Kader

Department of Leadership, University of Kwazulu Natal, Durban, South Africa

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APA Style

George Chirwa, Abdulla Kader. (2018). Analysis of Economic Development Impact of Remittances on Recipient (Zimbabwe) and Remitting (South Africa) Countries. Journal of Business and Economic Development, 3(3), 77-85. https://doi.org/10.11648/j.jbed.20180303.13

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ACS Style

George Chirwa; Abdulla Kader. Analysis of Economic Development Impact of Remittances on Recipient (Zimbabwe) and Remitting (South Africa) Countries. J. Bus. Econ. Dev. 2018, 3(3), 77-85. doi: 10.11648/j.jbed.20180303.13

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AMA Style

George Chirwa, Abdulla Kader. Analysis of Economic Development Impact of Remittances on Recipient (Zimbabwe) and Remitting (South Africa) Countries. J Bus Econ Dev. 2018;3(3):77-85. doi: 10.11648/j.jbed.20180303.13

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@article{10.11648/j.jbed.20180303.13,
  author = {George Chirwa and Abdulla Kader},
  title = {Analysis of Economic Development Impact of Remittances on Recipient (Zimbabwe) and Remitting (South Africa) Countries},
  journal = {Journal of Business and Economic Development},
  volume = {3},
  number = {3},
  pages = {77-85},
  doi = {10.11648/j.jbed.20180303.13},
  url = {https://doi.org/10.11648/j.jbed.20180303.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jbed.20180303.13},
  abstract = {The importance of remittances to recipient economies has been greatly researched and there is a general consensus around their continued significance to these countries. However, their impact on the development of the receiving economies remains a subject of much debate among academics and policy makers. There is even greater dearth of academic research and debate around the impact of remittances on the sending economies. Unlike Foreign Direct Investment (FDI) flows, whose impact on the economies can be closely correlated to the economies’ outputs, remittances are micro-payments fragmented to multiple recipients, from multiple individual senders with different motives and for a multitude of uses. The researcher modified The Newtonian Gravity model first adapted by a Dutch economist, Timbergen as the first published proponent of the Newtonian gravity model application in analysis of financial flows. The model was applied to remittance flows between the sender and recipient countries, and assess the economic impact on the two economies. The key corridor of the research was between Zimbabwe and South Africa, which represents one of the biggest regional remittances flow corridors in Africa. The investigation revealed that remittances not only had a significant impact on recipient economies, but showed a negative correlation with Zimbabwe’s GDP in particular. Outflows of remittances proved to have very little impact on the sending country, South Africa. On further examination of the other countries studied, distance from the main remitting country had a negative correlation with remittances flows. Economic impairment of receiving countries increased their dependency on the remittances flows, and the funds were not directed at activities that directly contributed to GDP growth of recipient countries.},
 year = {2018}
}

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TY  - JOUR
T1  - Analysis of Economic Development Impact of Remittances on Recipient (Zimbabwe) and Remitting (South Africa) Countries
AU  - George Chirwa
AU  - Abdulla Kader
Y1  - 2018/11/21
PY  - 2018
N1  - https://doi.org/10.11648/j.jbed.20180303.13
DO  - 10.11648/j.jbed.20180303.13
T2  - Journal of Business and Economic Development
JF  - Journal of Business and Economic Development
JO  - Journal of Business and Economic Development
SP  - 77
EP  - 85
PB  - Science Publishing Group
SN  - 2637-3874
UR  - https://doi.org/10.11648/j.jbed.20180303.13
AB  - The importance of remittances to recipient economies has been greatly researched and there is a general consensus around their continued significance to these countries. However, their impact on the development of the receiving economies remains a subject of much debate among academics and policy makers. There is even greater dearth of academic research and debate around the impact of remittances on the sending economies. Unlike Foreign Direct Investment (FDI) flows, whose impact on the economies can be closely correlated to the economies’ outputs, remittances are micro-payments fragmented to multiple recipients, from multiple individual senders with different motives and for a multitude of uses. The researcher modified The Newtonian Gravity model first adapted by a Dutch economist, Timbergen as the first published proponent of the Newtonian gravity model application in analysis of financial flows. The model was applied to remittance flows between the sender and recipient countries, and assess the economic impact on the two economies. The key corridor of the research was between Zimbabwe and South Africa, which represents one of the biggest regional remittances flow corridors in Africa. The investigation revealed that remittances not only had a significant impact on recipient economies, but showed a negative correlation with Zimbabwe’s GDP in particular. Outflows of remittances proved to have very little impact on the sending country, South Africa. On further examination of the other countries studied, distance from the main remitting country had a negative correlation with remittances flows. Economic impairment of receiving countries increased their dependency on the remittances flows, and the funds were not directed at activities that directly contributed to GDP growth of recipient countries.
VL  - 3
IS  - 3
ER  -

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