Foreign Remittances and Human Resource Development in Developing Countries

Abstract

Human resources are the vital instrument for the attainment of sustainable development. Health and education are amongst the main concerns of Sustainable Development Goals (SDGs) and the remittances have been understood as a recommended catalyst in obtaining human resource development in developing countries. The present study attempts to provide a deep understanding of the relationship between remittances and HRD by using a panel dataset spanning from 1990 to 2016 and covering 151 developing economies. The data was obtained from the World Bank’s World Development Indicators. Infant mortality rate (for health) and secondary school enrollment (for education) are taken as proxies to measure HRD. The results of the Generalized Method of Moments (GMM) technique show that role of remittances helps promote HRD. Disaggregate analyses based on the per capita GNI of economies show that remittances have more impact in reducing infant mortality in high-income countries and in increasing school enrollment in low-income countries. Disaggregate analyses based on the regional classification of economies show that remittances have an impact in reducing infant mortality in all regions but the highest influence was found in South Asia and the lowest impact in Latin America. Likewise, remittances were found to have an impact in increasing school enrollment, but comparatively more influence of remittances was found in Latin America and less in Sub-Saharan Africa. The study signifies the role of remittances in HRD for developing economies and suggests developing strategies persuading the labor migration and networks for remittances to be remitted for the home economies.