Worker remittances from abroad can help a domestic economy improve the welfare of its population. Yet, according to economists Ralph Chami, Ekkehard Ernst, Connel Fullenkamp and Anne Oeking, policy makers often must deal with the distorted incentives that remittances create. Rather than fueling economic growth, these capital inflows tend to act like a drug, increasing the recipient’s dependence on them and causing macroeconomic stagnation. This perceptive study offers analysts and economists a fresh look at the factors affecting economic growth in developing countries.
About the Authors
Ralph Chami and Anne Oeking are economists at the IMF. Ekkehard Ernst is chief of macroeconomic policy at the International Labour Organization. Connel Fullenkamp is an economics professor at Duke University.