The role of remittances in the growth of developing recipient economies

International remittances are funds sent by individuals living and working in a foreign economy to their country of origin. This paper seeks to determine whether remittances contribute to the growth of developing countries by investigating how these fund flows affect consumption and investrnent behaviour of recipients in these economies. Using a panel of 40 developing countries covering the period 1975 to 2003, this paper finds that recipients save about 25401% of their remittances. However, despite controlling for important factors such as economic openness and level of financial development, estimations on the relationship between remittance savings and domestic investment are inconclusive.