Abstract:

This contribution investigates the causal interactions between foreign direct investment (FDI), economic freedom and economic growth in a panel of 4 countries of North Africa (Tunisia, Morocco, Algeria and Egypt) from 1980 to 2012. Using System Generalized Method of Moment (GMM) panel data analysis, we find strong evidence of a positive link between remittances and economic growth. We also find evidence that economic freedom appear to be working as a complement to remittances and, moreover, that the effect of remittances is more pronounced in the presence of the economic freedom variable. Thus, to the extent that remittances have become a major source of external development finance, policies promoting greater freedom of economic activities gain significantly from the presence of remittances.

Keywords: