Does Remittance Outflow Stimulate or Retard Economic Growth?

This article evaluates the association between remittance outflow (RMO) and economic growth in the Gulf Cooperation Council (GCC) countries. The results of this evaluation indicate that RMO Granger creates gross domestic product (GDP) per capita in three countries, namely, Bahrain, Oman and Saudi Arabia. Similarly, the results for causality from GDP per capita to RMO are significant for four countries, namely, Bahrain, Kuwait, Qatar, and Saudi Arabia. The findings differ from those of the household consumption model, stating that higher RMO will decrease economic activity. GDP per capita is the main determinant of RMO, suggesting that economic growth promises and encourages continuous RMO and vice versa. The adverse impact of RMO can be minimized by encouraging the local population to be productive in the private sector, as local productivity will reduce the huge influx of foreign workers and provide valuable local investment opportunities to lessen the amount being remitted.