The Impacts of Migrants' Transfers of Funds on Economic Growth and Living Standards in the WAEMU Zone

Abstract

This study examines the impacts of migrants’ transfers on economic growth and social welfare in the WAEMU zone. A model of simultaneous equations in panel data is developed to compensate for the endogeneity and simultaneity of the variables, and whose estimation is performed by the two-stage least squares techniques using instrumental variables. In addition, a composite social welfare indicator was constructed on which the impacts of migrants’ transfers of funds were assessed. The results indicate that financial development is the main channel for indirect transmission of the effects of migrant transfers on economic growth. However, we did not detect a direct effect in one direction or the other between growth and transfers. Nonetheless, they have positive and very significant impacts on the welfare of the population. Also, the democratic variables introduced into the models impact positively economic growth and the standard of living in the WAEMU zone.