DO FOREIGN REMITTANCES PROMOTE DEMOCRACY? A DYNAMIC PANEL STUDY OF DEVELOPING COUNTRIES

The article examines the political aspect of remittances that receives very little attention in the current academic studies. By analyzing panel data from 156 countries with the systemGMM, the study finds that remittances promote democracy in developing countries. Time trends analysis shows that remittances support democratic progress more substantially in recent periods since the surge of remittances after the 1990s. The study also finds that remittances accelerate the development of democracy in countries with favorable socioeconomic conditions and higher absorptive capacity. Finally, supporting the modernization hypothesis, the study provides evidence that remittances develop democracy by boosting economic development and human capital.