Do labor remittance outflows retard economic growth in Qatar? Evidence from nonlinear cointegration

Abstract

This paper explores the effects of remittance outflows on real GDP per capita in the Qatar economy. While few works investigated the impact of remittance outflows on economic growth for remitting countries, they did not examine the potential asymmetric impact on economic growth. This study fills this gap by examining the asymmetric impacts of remittance outflows on real GDP per capita and non-oil real GDP per capita in Qatar over the period 2000:Q1-2019:Q4. The empirical estimation is based on an advanced econometrics technique, namely the nonlinear autoregressive distributed lags (NARDL) proposed by Shin et al. (2014). The empirical findings reveal that remittances outflows have negative and significant impact on real GDP per capita in Qatar economy. In particular, positive changes of remittance outflows exert a greater impact on non-oil real GDP per capita than negative changes. A larger increase in remittance outflows would lead to a decrease in the aggregate demand and produce a deflationary pressure. The magnitude of remittance outflows and their asymmetric impact are extremely important outcomes that should be considered by policy makers in this regard. Thus, specific national polices are needed to create a diversified labor market, encourage foreign workers' spending, and increase the local workers' participation in the economy. 2021