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minus1\p@ \parsep 2\p@ plus\p@ minus\p@ \itemsep 1pt} } \makeatother \fvset{frame=single,numberblanklines=false,xleftmargin=5mm,xrightmargin=5mm} \fancyhf{} \setlength{\headheight}{14pt} \fancyhead[LE]{\bfseries\leftmark} \fancyhead[RO]{\bfseries\rightmark} \fancyfoot[RO]{} \fancyfoot[CO]{\thepage} \fancyfoot[LO]{\TheID} \fancyfoot[LE]{} \fancyfoot[CE]{\thepage} \fancyfoot[RE]{\TheID} \hypersetup{citebordercolor=0.75 0.75 0.75,linkbordercolor=0.75 0.75 0.75,urlbordercolor=0.75 0.75 0.75,bookmarksnumbered=true} \fancypagestyle{plain}{\fancyhead{}\renewcommand{\headrulewidth}{0pt}} \date{} \usepackage{authblk} \providecommand{\keywords}[1] { \footnotesize \textbf{\textit{Index terms---}} #1 } \usepackage{graphicx,xcolor} \definecolor{GJBlue}{HTML}{273B81} \definecolor{GJLightBlue}{HTML}{0A9DD9} \definecolor{GJMediumGrey}{HTML}{6D6E70} \definecolor{GJLightGrey}{HTML}{929497} \renewenvironment{abstract}{% \setlength{\parindent}{0pt}\raggedright \textcolor{GJMediumGrey}{\rule{\textwidth}{2pt}} \vskip16pt \textcolor{GJBlue}{\large\bfseries\abstractname\space} }{% \vskip8pt \textcolor{GJMediumGrey}{\rule{\textwidth}{2pt}} \vskip16pt } \usepackage[absolute,overlay]{textpos} \makeatother \usepackage{lineno} \linenumbers \begin{document} \author[1]{Dr. Muhammad Azam} \author[2]{Asmatullah Khan} \affil[1]{ University of Illinois} \renewcommand\Authands{ and } \date{\small \em Received: 23 September 2011 Accepted: 13 October 2011 Published: 27 October 2011} \maketitle \begin{abstract} The basic objective of every state is to uplift social welfare of the society. There are different ways to boost the process of socio -economic growth, welfare and development but the role of workers? remittances is not the sole but very decisive and eminent in its nature. Therefore, this aims to explore theoretically and empirically the impacts of workers? remittances on economic growth of Azerbaijan and Armenia?s economies. The statistical analysis has been made through simple log linear regression model and the method of least square has been used. The finding of the study indicates that worker remittances are significant and have positive impacts on economic growth and development for the study area. Thus, findings suggest that the relevant authorities of both the countries need to formulate appropriate conducive policies in order to encourage worker remittances. In addition, it is further, suggests that workers? remittances received from other countries must also be utilized more efficiently to have similar impacts. \end{abstract} \keywords{Worker remittances, Economic Growth, Regression Analysis, Azerbaijan, Armenia.} \begin{textblock*}{18cm}(1cm,1cm) % {block width} (coords) \textcolor{GJBlue}{\LARGE Global Journals \LaTeX\ JournalKaleidoscope\texttrademark} \end{textblock*} \begin{textblock*}{18cm}(1.4cm,1.5cm) % {block width} (coords) \textcolor{GJBlue}{\footnotesize \\ Artificial Intelligence formulated this projection for compatibility purposes from the original article published at Global Journals. However, this technology is currently in beta. \emph{Therefore, kindly ignore odd layouts, missed formulae, text, tables, or figures.}} \end{textblock*} \let\tabcellsep& \section[{INTRODUCTION}]{INTRODUCTION}\par istory reveals that process of population migration from one place to another place in order to improve living standards or living conditions are continued from centuries. International migrations have many advantages, because not only a simple physical change occurred in places but it certainly improves the living condition of the families in their home country as well. Therefore, workers remittances have become the most influential source to enhance the socioeconomic condition of the people living in the country of migrated people and bolster economic development \hyperref[b12]{(Khan 2005}). The literature survey revealed that there are a number of channels to spur the process of economic growth and development like increasing physical capital, investment in human capital, expanding volume of exports, adopting appropriate technology, development assistance, politically stability and many others. However, one can't ignore importance of workers' remittances in the process of economic growth and development. \hyperref[b2]{Adams and Page (2005)} described that remittances help in poverty alleviation because the poor portion of the society which are economically isolated class of the population receives it directly.\par Money received through remittances is generally spent on children education, health care and to run micro business as well \hyperref[b22]{(John, 2004)}. Obviously, finance is the much needed investment in most of the under -developed host countries to contribute to increase productivity and bolstering economic development. Substantially on account of the increase in remittances, poverty can be alleviated because it has been statistically observed that migrants sending money to their home countries for their families, remittances increase income of the households increase consumption. Furthermore, migration of the unskilled workers on return to their home countries acquires practical and useful skills in abroad. Puri and Ritzema, (1999) and Martin, (2001) stated that at the macroeconomic level, remittances are a considerable source of foreign exchange as they enhance the level of national income. However, remittances can also have negative macroeconomic effects as it is generating dependence among the recipients; encouraging continued migration of the available labour force; reducing the likelihood of national or foreign investment due to an unstable or untrustworthy workforce; and motivating greater inequity among rural communities (i.e., those families who are receiving foreign remittances is comparatively better off than those non recipient families). Ratha and Mohapatra (2007) have rightly stated that international migration can make significant welfare gains for migrants, as well as countries of origin and destination, and diminish poverty. Explicitly, remittances are sound source of external finance for less developed countries.\par However, there are countable disadvantages of remittances as some emigrants may be educated or highly skilled causing what commonly known as "brain drain" and this is not a good sign in the context of economic development for developing countries because home country invested time, effort and money on their education. Leon-Ledesma and Piracha (2004) suggests that international migration/remittances paralyze countries making them dependent on remittances. Reliance on remittances distorts development and creates inequalities and disparities among the people within the country.\par As per the report of World Factbook and other sources like CIA (2011) Azerbaijan economic performance during 2006-08 was remained sound and it was all due to large and expanding oil exports along with some non-export sectors including growth in the Abstract -The basic objective of every state is to uplift social welfare of the society. There are different ways to boost the process of socio -economic growth, welfare and development but the role of workers' remittances is not the sole but very decisive and eminent in its nature. Therefore, this aims to explore theoretically and empirically the impacts of workers' remittances on economic growth of Azerbaijan and Armenia's economies. The statistical analysis has been made through simple log linear regression model and the method of least square has been used. The finding of the study indicates that worker remittances are significant and have positive impacts on economic growth and development for the study area. Thus, findings suggest that the relevant authorities of both the countries need to formulate appropriate conducive policies in order to encourage worker remittances. In addition, it is further, suggests that workers' remittances received from other countries must also be utilized more efficiently to have similar impacts.\par construction, real estate and banking sectors. Economic growth during 2009 was estimated above 9\%, while the economic growth during 2010 remained sluggish and estimated almost 3.7\% accordingly. Though, currently for the economy of the Azerbaijan there are certain challenges in respect of oil export which currently have been seen on declining, however efforts are needed to diversify its economy appropriately, because dependency only on one sector have always negative impacts. Less increase has been estimated in the gross domestic product (GDP) of Armenia in 2009, because of some imbalances in macroeconomic indicators includes decline in the construction industries. The inflow of foreign remittances in 2009 was US\$ 11 million as it was in 2008, so no change has been recorded. However, Armenia's economy started to recover during 2010 and economic growth recorded 4.7\% on account of economic diversification. The report further reveals that Armenia is mostly dependent on Russian commercial and official support and most of the key Armenian infrastructure is Russian-owned and managed, especially in the energy sector. To boost the process of economic development, Armenia needs to follow more additional economic reforms (World Factbook and CIA, 2011).\par Objective of the present study is to test quantitatively the impact of worker remittances on economic growth of Azerbaijan and Armenia economies during the study period from 1995 to 2010. Moreover, empirical findings of the study will indicate the impact of remittances in the form of socioeconomic development and also as a guiding instrument to assist policy makers. \section[{II.}]{II.} \section[{LITERATURE REVIEW}]{LITERATURE REVIEW}\par The literature review revealed that sources of economic growth are technological change and physical capital investment (Solow, 1956), surplus labour \hyperref[b19]{(Fields, 1980)}, foreign aid \hyperref[b15]{(Levy, 1987} remittance have a positive impact on socio-economic development. \hyperref[b21]{Ivakhnyuk (2006)} reported that workers' remittances which are closely related to migration obviously have an impact on the stable economic development, particularly for smaller countries such as Kyrgyzstan or Tajikistan. While Jones, Black and Ronald Skeldon (2007) analyzed the impact of remittances on Tajikistan development and found that migration and remittances in Tajikistan have been taking a role of a "shock absorber" that has been reducing socioeconomic difficulties in this specific developing economy. Cohen (2005) evaluated the impact of remittances on socio-economic development and found a negative impact of remittances on less developed countries. Fayissa and Nsiah (2010) investigated the aggregate impact of remittances on the economic growth of 18 Latin American Countries for the period from1980 to 2005 and found a positive and significant effect of remittances on the growth of Latin American Countries.\par The study of the literature further reveals that theoretical and empirical evidences on the impact of workers remittances on economic development and growth have made the issue debatable, because some researchers are in favour of remittances positive impacts, while some negate its outcomes but a few are of the view that there are no relations between the two. However, comparatively the major portion of literature found is in favour of positive impact of workers' remittances on economic growth and development of developing countries. \section[{III.}]{III.} \section[{TREND OF WORKERS' REMITTANCES}]{TREND OF WORKERS' REMITTANCES}\par Data regarding resources inflows into World, developing countries and Europe and Central Asia are summarized in Tables 1, 2, 3 and 4 respectively. Table \hyperref[tab_1]{1} shows increasing trend in workers' remittances from 1995 to 2010 to developing countries as remittances were only US\$ 55 billion in 1995 and increased to US\$ 325 billion in 2010. US\$ 270 billion remittances increase to developing countries in 2010 if compared with remittance flows in 1995. Table \hyperref[tab_2]{2} \section[{METHODOLOGY AND DATA}]{METHODOLOGY AND DATA}\par The following simple linear regression model uses exploring the impact of remittances on economic growth.\par (\par Where gdp = gross domestic product, wr= workers' remittances, and µ= error term and show effects of the other factors. Lower case letters denote the natural logarithm of variables. Equation (1) expects that remittance has positive impact on economic growth.\par It is clear from the nature of the study that this study is based on secondary data. It was thought in the beginning to analyze a long period data but unluckily data were not available on required variables for the study area and therefore, only data for the period from 1995 to 2010 was analyzed. For analysis data have been obtained from World Development Indicator (various issues) and World Bank Factbook (2011) respectively. The data uses for regression analysis are in current US\$. Simple log linear regression model and the method of least square as an analytical technique has been used. Eviews statistical software has been utilized for computation analysis.\par V. \section[{OLS RESULTS AND DISCUSSION}]{OLS RESULTS AND DISCUSSION}\par Results obtained are acceptable and statistically significant on the basis of R-squared (R2) and adjusted R-squared values, though Durbin Watson statistics values are less desirable but however, acceptable. A summary of the ordinary least squares results are reported in tables 5 for Azerbaijan and Armenia. The non-availability of data for a long period of time has restrained the study for further time series analysis. However, least square results found are virulently support the study hypotheses and are encourageable.\par In case of Azerbaijan results presented in Table \hyperref[tab_5]{5} found are satisfactory with 90 \% R2 value and it shows total 90\% variation of this explanatory variable worker remittance in the economic growth of the economy. The impact of worker remittances on economic growth found statistically positively significant at 1\% level of significance. The coefficient size found is 0.40 which shows that one unit change in worker remittances will bring 0.40 unit change in the economic growth. Certainly, coefficients of the parameters show elasticity as well. Likewise, empirical result on Armenia presented in Table \hyperref[tab_5]{5} found with R2 value 60 \% and shows that overall model is significant and shows 60\% variation by the explanatory variable in economic growth of the economy. The impact of worker remittances found positively significant at 1\% level of significance. The coefficient size found is 0. -Asterisk a show statistically significant at 1 percent level of significance -N=Number of Observations VI. \section[{CONCLUSIONS}]{CONCLUSIONS}\par Results of the present study are meaningful and will helps policy makers of each country in respect of improving socio-economic development. The basic objective of every state is to increase social welfare of the community. As discussed in the beginning of this study a number of ways lead to boost the process of economic growth and development but the role of workers' remittances should not be ignored rather needs to be considered equally. This study proved empirically through regression analysis that worker remittances are significant for the acceleration of economic growth for the study area. It is concluded that the management authorities of both countries i.e. Azerbaijan and Armenia needs to formulate appropriate conducive policies for the encouragement of worker remittances. It further suggests that the worker remittances received from the other countries must be utilized more efficiently in order to improve society living conditions. \begin{figure}[htbp] \noindent\textbf{}\includegraphics[]{image-2.png} \caption{\label{fig_0}H}\end{figure} \begin{figure}[htbp] \noindent\textbf{1} \par \begin{longtable}{P{0.85\textwidth}} US\$ billion\end{longtable} \par \caption{\label{tab_1}Table 1 :}\end{figure} \begin{figure}[htbp] \noindent\textbf{2} \par \begin{longtable}{P{0.85\textwidth}} US\$ billions\end{longtable} \par \caption{\label{tab_2}Table 2 :}\end{figure} \begin{figure}[htbp] \noindent\textbf{3} \par \begin{longtable}{P{0.85\textwidth}} US\$ million\end{longtable} \par \caption{\label{tab_3}Table 3 :}\end{figure} \begin{figure}[htbp] \noindent\textbf{4} \par \begin{longtable}{P{0.3694774346793349\textwidth}P{0.0020190023752969122\textwidth}P{0.0020190023752969122\textwidth}P{0.0020190023752969122\textwidth}P{0.0020190023752969122\textwidth}P{0.06864608076009501\textwidth}P{0.0020190023752969122\textwidth}P{0.0020190023752969122\textwidth}P{0.0020190023752969122\textwidth}P{0.03634204275534442\textwidth}P{0.07066508313539192\textwidth}P{0.046437054631828976\textwidth}P{0.044418052256532066\textwidth}P{0.07470308788598574\textwidth}P{0.0504750593824228\textwidth}P{0.03836104513064133\textwidth}P{0.03634204275534442\textwidth}} \tabcellsep \tabcellsep \tabcellsep \tabcellsep \tabcellsep \multicolumn{5}{l}{Workers Remittances into Armenia}\tabcellsep US\$ million\\ Years\tabcellsep \tabcellsep \tabcellsep \tabcellsep \tabcellsep \tabcellsep \tabcellsep \tabcellsep \tabcellsep 2003\tabcellsep 2004\tabcellsep 2005\tabcellsep 2006\tabcellsep 2007 2008 2009 2010e\\ \multicolumn{7}{l}{Inward remittance flows}\tabcellsep \tabcellsep \tabcellsep 168\tabcellsep 435\tabcellsep 498\tabcellsep 658\tabcellsep 846\tabcellsep 1,062 769\tabcellsep 824\\ \multicolumn{6}{l}{Workers' remittances}\tabcellsep \tabcellsep \tabcellsep \tabcellsep 9\tabcellsep 43\tabcellsep 58\tabcellsep 74\tabcellsep 94\tabcellsep 124\tabcellsep 86\tabcellsep ??\\ \multicolumn{9}{l}{Compensation of employees}\tabcellsep 153\tabcellsep 382\tabcellsep 429\tabcellsep 576\tabcellsep 743\tabcellsep 929\tabcellsep 677\tabcellsep ?\\ \multicolumn{5}{l}{Migrants' transfers}\tabcellsep \tabcellsep \tabcellsep \tabcellsep \tabcellsep 6\tabcellsep 10\tabcellsep 11\tabcellsep 8\tabcellsep 9\tabcellsep 9\tabcellsep 7\tabcellsep ??.\\ \multicolumn{8}{l}{Outward remittance flows}\tabcellsep \tabcellsep 27\tabcellsep 138\tabcellsep 152\tabcellsep 154\tabcellsep 176\tabcellsep 185\tabcellsep 145\tabcellsep ??.\\ \multicolumn{6}{l}{Workers' remittances}\tabcellsep \tabcellsep \tabcellsep \tabcellsep 6\tabcellsep 10\tabcellsep 16\tabcellsep 19\tabcellsep 5\tabcellsep 11\tabcellsep 11\tabcellsep ??.\\ \multicolumn{9}{l}{Compensation of employees}\tabcellsep 19\tabcellsep 122\tabcellsep 133\tabcellsep 130\tabcellsep 166\tabcellsep 169\tabcellsep 130\tabcellsep ??.\\ \multicolumn{5}{l}{Migrants' transfers}\tabcellsep \tabcellsep \tabcellsep \tabcellsep \tabcellsep 2\tabcellsep 6\tabcellsep 3\tabcellsep 6\tabcellsep 5\tabcellsep 5\tabcellsep ?.\tabcellsep ?..\\ gdp\tabcellsep =\tabcellsep ?\tabcellsep +\tabcellsep ?\tabcellsep wr\tabcellsep +\tabcellsep +\tabcellsep µ\end{longtable} \par \caption{\label{tab_4}Table 4 :}\end{figure} \begin{figure}[htbp] \noindent\textbf{5} \par \begin{longtable}{P{0.2990118577075099\textwidth}P{0.2855731225296443\textwidth}P{0.2654150197628458\textwidth}} \tabcellsep Azerbaijan\tabcellsep Armenia\\ Explanatory variables\tabcellsep Coefficients\tabcellsep Coefficients\\ wr\tabcellsep 0.41\tabcellsep 0.46\\ \tabcellsep {}[0.03]\tabcellsep {}[0.10]\\ \tabcellsep (11.75) a\tabcellsep (4.63) a\\ C\tabcellsep 15.70\tabcellsep 13.12\\ \tabcellsep {}[0.63]\tabcellsep {}[1.94]\\ \tabcellsep (25.01)\tabcellsep (6.76)\\ R 2\tabcellsep 0.91\tabcellsep 0.60\\ Adj. R 2\tabcellsep 0.90\tabcellsep 0.57\\ S.E. of regression\tabcellsep 0.32\tabcellsep 0.54\\ D.W.\tabcellsep 1.33\tabcellsep 1.55\\ Akaike info criterion\tabcellsep 0.66\tabcellsep 1.72\\ F-statistic\tabcellsep 138.19\tabcellsep 21.17\end{longtable} \par {\small\itshape [Note: N\hyperref[b11]{16} 16]} \caption{\label{tab_5}Table 5 :}\end{figure} \footnote{© 2011 Global Journals Inc. (US)} \footnote{November © 2011 Global Journals Inc. (US) Workers' Remittances and Economic Growth: Evidence from Azerbaijan and Armenia} \backmatter \begin{bibitemlist}{1} \bibitem[ Economics & Finance]{b18}\label{b18} \textit{}, \textit{Economics \& Finance} Middle Tennessee State University \bibitem[Com/Wfbcurrent/Azerbaij and Omy ()]{b24}\label{b24} \textit{}, Com/Wfbcurrent/Azerbaij , Omy . \url{Http://Www.TheodoraHtml} \textit{Html Economy} 2011. \bibitem[Levy ()]{b15}\label{b15} ‘Aid and Economic Growth in the Sub-Saharan: Africa: The recent experience’. 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