Dalarna University's logo and link to the university's website

du.sePublications
Change search
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • chicago-author-date
  • chicago-note-bibliography
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf
Analyzing the effectiveness of remittances on economic growth in a dollarized economy: Case study Zimbabwe
Dalarna University, School of Culture and Society.
2025 (English)Independent thesis Advanced level (degree of Master (One Year)), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

This study investigates the impact of remittance inflows on economic growth in Zimbabwe, with a specific focus on the mediating role of dollarization. Using annual time-series data from 1985 to 2023 and employing the Autoregressive Distributed Lag (ARDL) bounds testing approach alongside an Error Correction Model (ECM), the analysis examines both short-run dynamics and long-run equilibrium relationships. Key macroeconomic control variables, trade openness, gross capital formation, population, external debt, and household consumption are included to provide a comprehensive empirical framework. The results reveal that remittances have a statistically significant and positive effect on long-run economic growth, while also acting as economic stabilizers in the short run. Notably, the interaction between remittances and dollarization is positive and significant, indicating that macroeconomic stability under dollarization enhances the growth-inducing potential of remittance flows. However, dollarization also shows a negative short-run impact on growth, highlighting the trade-offs associated with reduced monetary policy autonomy and liquidity constraints. Surprisingly, traditional growth drivers such as capital formation and trade openness are either not significant or negatively associated with growth, pointing to deep structural inefficiencies in the economy. The study recommends policy measures that include financial innovation, structural transformation, transparent macroeconomic governance, and improved debt management to maximize the developmental impact of remittances. It concludes that while dollarization temporarily enhanced remittance effectiveness, long-term gains require institutional reform, increased financial inclusion, and investment in productive sectors.

Place, publisher, year, edition, pages
2025.
Keywords [en]
Remittances, Dollarization, Economic Growth, ARDL Model, ECM, Zimbabwe, Macroeconomic Stability
National Category
Economics
Identifiers
URN: urn:nbn:se:du-50968OAI: oai:DiVA.org:du-50968DiVA, id: diva2:1986573
Subject / course
Economics
Available from: 2025-08-01 Created: 2025-08-01 Last updated: 2025-10-09

Open Access in DiVA

fulltext(1141 kB)191 downloads
File information
File name FULLTEXT01.pdfFile size 1141 kBChecksum SHA-512
f2dbe60a1b03f19ab81ce346251b39e3b8088ac828d987123a82fe1fecb9688acd62fae8e60a01e32f4a2c9545e4070c886b5b6fc6bc281de325c83f22fee860
Type fulltextMimetype application/pdf

By organisation
School of Culture and Society
Economics

Search outside of DiVA

GoogleGoogle Scholar
Total: 192 downloads
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

urn-nbn

Altmetric score

urn-nbn
Total: 321 hits
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • chicago-author-date
  • chicago-note-bibliography
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf