The interactive effect of remittances and civil liberties on investment and consumption

The interactive effect of remittances and civil liberties on investment and consumption Purpose – The purpose of this paper is to investigate the level of influence that civil liberties has on the marginal effect of remittances on gross domestic investment and consumption separately and measures it across all levels of civil liberties. Design/methodology/approach – The authors employ a two‐stage system generalized method of moments procedure and the civil liberties subset of the Freedom in the World Index as a proxy for civil liberty. Findings – The findings indicate a substitution effect from investment to consumption as civil liberties deteriorate for developing south economies, though not for emerging economies. In addition, the marginal effect of remittances on investment diminishes less quickly as economies become less free than it increases for consumption indicating that the substitution is not quite one‐for‐one. Practical implications – Economies with low levels of civil liberties could benefit by improving them in ways that would encourage recipients to channel remittances into investment rather than consumption. Originality/value – This paper differs from previous research in that the authors evaluate investment and consumption separately rather than embedding these component parts within growth. In addition, when interactions are employed in existing literature, the inference drawn is static with regard to the varying degrees of institutional development. Third, none of the prior studies directly explores civil liberties proper; they usually aggregate civil liberties with other aspects of political or economic freedom. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Development Issues Emerald Publishing

The interactive effect of remittances and civil liberties on investment and consumption

Loading next page...
 
/lp/emerald-publishing/the-interactive-effect-of-remittances-and-civil-liberties-on-Jpdi68A0AC
Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
1446-8956
DOI
10.1108/14468951111123319
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to investigate the level of influence that civil liberties has on the marginal effect of remittances on gross domestic investment and consumption separately and measures it across all levels of civil liberties. Design/methodology/approach – The authors employ a two‐stage system generalized method of moments procedure and the civil liberties subset of the Freedom in the World Index as a proxy for civil liberty. Findings – The findings indicate a substitution effect from investment to consumption as civil liberties deteriorate for developing south economies, though not for emerging economies. In addition, the marginal effect of remittances on investment diminishes less quickly as economies become less free than it increases for consumption indicating that the substitution is not quite one‐for‐one. Practical implications – Economies with low levels of civil liberties could benefit by improving them in ways that would encourage recipients to channel remittances into investment rather than consumption. Originality/value – This paper differs from previous research in that the authors evaluate investment and consumption separately rather than embedding these component parts within growth. In addition, when interactions are employed in existing literature, the inference drawn is static with regard to the varying degrees of institutional development. Third, none of the prior studies directly explores civil liberties proper; they usually aggregate civil liberties with other aspects of political or economic freedom.

Journal

International Journal of Development IssuesEmerald Publishing

Published: Apr 12, 2011

Keywords: Investments; Consumption; Civil and political rights; Developing countries

References

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Search

Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly

Organize

Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.

Access

Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve

Freelancer

DeepDyve

Pro

Price

FREE

$49/month
$360/year

Save searches from
Google Scholar,
PubMed

Create folders to
organize your research

Export folders, citations

Read DeepDyve articles

Abstract access only

Unlimited access to over
18 million full-text articles

Print

20 pages / month

PDF Discount

20% off