Remittances Inflows and Trade Policy

Abstract

This article explores the trade policy effect of remittances inflows, notably through three main channels, including trade imbalances, financial development and economic growth. The analysis uses a sample of 135 countries over the period 1996-2016. The findings suggest that remittances inflows induce trade policy liberalization, and the magnitude of this positive effect on trade policy liberalization is higher for less advanced countries, including poor countries than for relatively advanced countries. Furthermore, results suggest that the effect of remittances inflows on trade policy depends on countries' levels of trade imbalances, their financial development depth and their economic growth rate.