Do Migrant Remittances Foster Economic Growth? Empirical Evidence from Algeria Using the ARDL Approach

This study seeks to examine the impact of remittances on economic growth in Algeria over the period 1980-2023 using the ARDL model to estimate both short and long run effects of remittances on economic growth, including important control variables such as fixed capital formation, inflation, and oil prices. In the long run, remittances had a negative and statistically insignificant effect on economic growth, with only a limited short run effect, this reflects the dominance of consumption-driven uses of remittances and the significant proportion that are transferred through informal channels due to the disparity between parallel and official exchange rates, while capital formation had a strong positive and significant effect. Conversely, inflation and oil prices showed a negative and significant correlation with economic growth in the long run. The study thus concluded that remittances are ineffective in promoting economic growth in Algeria over both the short and long term and called for policy measures aimed at reducing the wedge between parallel and official exchange rates to reduce informal transfers, strengthening formal financial channels, and improving the investment climate to stimulate the productive use of remittances in support of sustainable economic growth.