Nexus of Remittances, Poverty and Economic Growth in Gulf Cooperation (GCC) Countries

Abstract

This research explores the influence of remittances and poverty on the economic growth of Gulf Cooperation Council (GCC) countries using panel data spanning from 2000 to 2021. Various data analysis techniques, including panel unit root tests, panel ARDL models, and panel Granger causality tests, were employed. The long-term results of the panel ARDL analysis reveal several significant relationships with economic growth in GCC countries. Factors such as labor, gross fixed capital formation, secondary school enrollment, remittances, and the interaction between poverty and remittances all exhibit positive associations with economic growth. Conversely, the poverty headcount ratio shows a negative correlation with economic growth in these GCC countries. Notably, labor, gross fixed capital formation, poverty, and remittances all demonstrate statistically significant impacts. Based on the findings of this study, it can be concluded that remittances play a pivotal role in promoting economic growth, whereas an increase in the poverty rate hampers economic growth in GCC countries. Therefore, it is recommended that GCC countries take proactive measures to enhance remittance levels while simultaneously reducing poverty levels in order to foster improved economic growth.