Can Foreign Direct Investment Outflows Spur Remittances and Enhance the Human Development Index?

This study examines the influence of outward foreign direct investment (OFDI) on the Human Development Index (HDI) in the top ten remittance-receiving countries from 2001 to 2022, with a particular focus on the moderating effect of remittance inflows. Employing the pooled mean group (PMG) autoregressive distributed lag (ARDL) approach, the analysis differentiates between short-run and long-run dynamics of the nexus between OFDI and HDI. The results reveal a statistically robust long-run moderating effect of remittances (REM) on the OFDI–human development nexus, with especially pronounced ­positive impact on the education and standard of living components of HDI, while short-run effects remain largely insignificant. However, REM are found to negatively moderate the relationship between OFDI and health outcomes, suggesting that remittance inflows are insufficient to enhance health without complementary public investment and institutional support. The findings underscore the need for governments and policymakers to strategically channel remittance inflows to achieve sustained improvements in human development in the long run.