Do Migrant Remittances Foster Economic Growth? Empirical Evidence from Algeria Using the ARDL Approach
Abstract
This study seeks to examine the impact of remittances on economic growth in Algeria over the period 1980-2023 using the ARDL model to estimate both short and long run effects of remittances on economic growth, including important control variables such as fixed capital formation, inflation, and oil prices. In the long run, remittances had a negative and statistically insignificant effect on economic growth, with only a limited short run effect, this reflects the dominance of consumption-driven uses of remittances and the significant proportion that are transferred through informal channels due to the disparity between parallel and official exchange rates, while capital formation had a strong positive and significant effect. Conversely, inflation and oil prices showed a negative and significant correlation with economic growth in the long run. The study thus concluded that remittances are ineffective in promoting economic growth in Algeria over both the short and long term and called for policy measures aimed at reducing the wedge between parallel and official exchange rates to reduce informal transfers, strengthening formal financial channels, and improving the investment climate to stimulate the productive use of remittances in support of sustainable economic growth.
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References
Ait Benhamou, Z., & Cassin, L. (2021). The impact of remittances on savings, capital and economic growth in small emerging countries. Economic Modelling, 94, 789–803. https://doi.org/10.1016/j.econmod.2020.02.019
Alsamara, M. (2022). Do labor remittance outflows retard economic growth in Qatar? Evidence from nonlinear cointegration. The Quarterly Review of Economics and Finance, 83, 1–9. https://doi.org/10.1016/j.qref.2021.11.002
Berument, M. H., Ceylan, N. B., & Dogan, N. (2010). The Impact of Oil Price Shocks on the Economic Growth of Selected MENA1 Countries. The Energy Journal, 31(1), 149–176. https://doi.org/10.5547/ISSN0195-6574-EJ-Vol31-No1-7
Boutalby, H., & Bensaid, M. (2022). The impact of migrant remittances on economic growth in Algeria An econometric study during the period 1970-2019 (Vol. 5, Issue 3).
Bucevska, V. (2022). Impact of Remittances on Economic Growth: Empirical Evidence from South-East European Countries. South East European Journal of Economics and Business, 17(1), 79–94. https://doi.org/10.2478/jeb-2022-0006
Chami, R., Fullenkamp, C., & Jahjah, S. (2005). Are Immigrant Remittance Flows a Source of Capital for Development? IMF Staff Papers, 52(1), 55–81.
Dickey, D. A., & Fuller, W. A. (1979). Distribution of the Estimators for Autoregressive Time Series With a Unit Root. Journal of the American Statistical Association, 74(366), 427. https://doi.org/10.2307/2286348
Fischer, S. (1993). The role of macroeconomic factors in growth. Journal of Monetary Economics, 32(3), 485–512. https://doi.org/10.1016/0304-3932(93)90027-D
Kamara, A. M., Sallam, M. A. M., & Ebrahim, E. E. M. (2025). Asymmetric Effects of Exchange Rates and Oil Prices on Inflation in Egypt. International Journal of Energy Economics and Policy, 15(3), 486–497. https://doi.org/10.32479/ijeep.18484
Khan, I. (2024). Analyzing the impact of positive and negative remittance inflow shocks on economic growth of India. Journal of Economic Studies, 51(2), 338–356. https://doi.org/10.1108/JES-02-2023-0089
Mutai, N. C., Ibeh, L., Nguyen, M. C., Kiarie, J. W., & Ikamari, C. (2025). Sustainable economic development in Kenya: influence of diaspora remittances, foreign direct investment and imports. African Journal of Economic and Management Studies, 16(1), 61–78. https://doi.org/10.1108/AJEMS-01-2024-0059
Necib, A., & Kerrache, A. (2025). The impact of Algerian migrants remittances on economic growth: an ARDL bound test approach. Journal of Excellence for Economics and Management Research, 09(01), 186–201. https://doi.org/10.34118/jeemr.v9i1.4217
Ofori, P. E., & Grechyna, D. (2021). Remittances, natural resource rent and economic growth in Sub-Saharan Africa. Cogent Economics & Finance, 9(1). https://doi.org/10.1080/23322039.2021.1979305
Pal, S., Villanthenkodath, M. A., Patel, G., & Mahalik, M. K. (2022). The impact of remittance inflows on economic growth, unemployment and income inequality: An international evidence. International Journal of Economic Policy Studies, 16(1), 211–235. https://doi.org/10.1007/s42495-021-00074-1
Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–326. https://doi.org/10.1002/jae.616
Phillips, P. C. B., & Perron, P. (1988). Testing for a Unit Root in Time Series Regression. Biometrika, 75(2), 335. https://doi.org/10.2307/2336182
Ratha, D. (2013). The Impact of Remittances on Economic Growth and Poverty Reduction. www.knomad.org/powerpoints/
Roy, A. (2023). Nexus between economic growth, external debt, oil price, and remittances in India: New insight from novel DARDL simulations. Resources Policy, 83, 103742. https://doi.org/10.1016/j.resourpol.2023.103742
Zardoub, A., & Sboui, F. (2023). Impact of foreign direct investment, remittances and official development assistance on economic growth: panel data approach. PSU Research Review, 7(2), 73–89. https://doi.org/10.1108/PRR-04-2020-0012
Ait Benhamou, Z., & Cassin, L. (2021). The impact of remittances on savings, capital and economic growth in small emerging countries. Economic Modelling, 94, 789–803. https://doi.org/10.1016/j.econmod.2020.02.019
Alsamara, M. (2022). Do labor remittance outflows retard economic growth in Qatar? Evidence from nonlinear cointegration. The Quarterly Review of Economics and Finance, 83, 1–9. https://doi.org/10.1016/j.qref.2021.11.002
Berument, M. H., Ceylan, N. B., & Dogan, N. (2010). The Impact of Oil Price Shocks on the Economic Growth of Selected MENA1 Countries. The Energy Journal, 31(1), 149–176. https://doi.org/10.5547/ISSN0195-6574-EJ-Vol31-No1-7
Boutalby, H., & Bensaid, M. (2022). The impact of migrant remittances on economic growth in Algeria An econometric study during the period 1970-2019 (Vol. 5, Issue 3).
Bucevska, V. (2022). Impact of Remittances on Economic Growth: Empirical Evidence from South-East European Countries. South East European Journal of Economics and Business, 17(1), 79–94. https://doi.org/10.2478/jeb-2022-0006
Chami, R., Fullenkamp, C., & Jahjah, S. (2005). Are Immigrant Remittance Flows a Source of Capital for Development? IMF Staff Papers, 52(1), 55–81.
Dickey, D. A., & Fuller, W. A. (1979). Distribution of the Estimators for Autoregressive Time Series With a Unit Root. Journal of the American Statistical Association, 74(366), 427. https://doi.org/10.2307/2286348
Fischer, S. (1993). The role of macroeconomic factors in growth. Journal of Monetary Economics, 32(3), 485–512. https://doi.org/10.1016/0304-3932(93)90027-D
Kamara, A. M., Sallam, M. A. M., & Ebrahim, E. E. M. (2025). Asymmetric Effects of Exchange Rates and Oil Prices on Inflation in Egypt. International Journal of Energy Economics and Policy, 15(3), 486–497. https://doi.org/10.32479/ijeep.18484
Khan, I. (2024). Analyzing the impact of positive and negative remittance inflow shocks on economic growth of India. Journal of Economic Studies, 51(2), 338–356. https://doi.org/10.1108/JES-02-2023-0089
Mutai, N. C., Ibeh, L., Nguyen, M. C., Kiarie, J. W., & Ikamari, C. (2025). Sustainable economic development in Kenya: influence of diaspora remittances, foreign direct investment and imports. African Journal of Economic and Management Studies, 16(1), 61–78. https://doi.org/10.1108/AJEMS-01-2024-0059
Necib, A., & Kerrache, A. (2025). The impact of Algerian migrants remittances on economic growth: an ARDL bound test approach. Journal of Excellence for Economics and Management Research, 09(01), 186–201. https://doi.org/10.34118/jeemr.v9i1.4217
Ofori, P. E., & Grechyna, D. (2021). Remittances, natural resource rent and economic growth in Sub-Saharan Africa. Cogent Economics & Finance, 9(1). https://doi.org/10.1080/23322039.2021.1979305
Pal, S., Villanthenkodath, M. A., Patel, G., & Mahalik, M. K. (2022). The impact of remittance inflows on economic growth, unemployment and income inequality: An international evidence. International Journal of Economic Policy Studies, 16(1), 211–235. https://doi.org/10.1007/s42495-021-00074-1
Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–326. https://doi.org/10.1002/jae.616
Phillips, P. C. B., & Perron, P. (1988). Testing for a Unit Root in Time Series Regression. Biometrika, 75(2), 335. https://doi.org/10.2307/2336182
Ratha, D. (2013). The Impact of Remittances on Economic Growth and Poverty Reduction. www.knomad.org/powerpoints/
Roy, A. (2023). Nexus between economic growth, external debt, oil price, and remittances in India: New insight from novel DARDL simulations. Resources Policy, 83, 103742. https://doi.org/10.1016/j.resourpol.2023.103742
Zardoub, A., & Sboui, F. (2023). Impact of foreign direct investment, remittances and official development assistance on economic growth: panel data approach. PSU Research Review, 7(2), 73–89. https://doi.org/10.1108/PRR-04-2020-0012
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