The Effect of Migrant Worker Remittances on Economic Growth in Low- and Middle-Income Developing Countries: a Systematic Literature Review

Abstract

A country's economic growth is greatly influenced by various factors, including remittances by migrant workers. This study aims to analyze the influence of remittances of migrant workers on economic growth. The method used is a literature study with a systematic literature review (SLR) approach. This study identified 250 publications from the Emerald Publisher, ScienceDirect, and Google Scholar databases (2012–2024 period), then filtered until 22 relevant studies were obtained. The results of the study indicated that as many as 68.2% of remittances contributed positively and significantly to economic growth, while the remaining 31.8% did not show a positive and significant influence. This suggests that there are other factors that also affect economic growth and deserve further exploration. This study also found that there is a difference in the influence of remittances in developing countries with low income and middle income categories. In middle-income countries, remittances tend to have a positive and significant influence as a support for long-term investment and development when compared to low income. Human capital and an effective financial system are key factors that encourage remittances to have an impact on economic growth in developing countries. Developing countries with low income have poor financial systems which cause the positive impact of remittances on economic growth to be insignificant. These findings demonstrate the importance of official remittance channels and the use of remittance funds for productive investment to drive sustainable economic growth. In addition, the level of human capital greatly affects the effectiveness of remittances in supporting economic growth in developing countries.