Remittances, Regime Type, and Government
Malcolm R. Easton
&Gabriella R. Montinola
Published online: 22 December 2016
#Springer Science+Business Media New York 2016
Abstract Previous work suggests that remittances enable governments to reduce
spending on public services and divert resources to serve their own interests. We argue
this need not occur. Building on recent work which shows that the impact of remit-
tances is contingent on the domestic environment in remittance-receiving countries, we
hypothesize that (1) remittances are more likely to increase government spending on
public services in democracies than in autocracies and (2) remittances are more likely to
finance activities that deter political competition in autocracies than in democracies.
Using a sample of 105 developing countries from 1985 through 2008, we find strong
support for our hypotheses when examining the impact of remittances on public
education, health, and military spending. We also provide suggestive evidence for the
mechanism underpinning our results: micro-level evidence on remittance recipients’
preferences and political engagement.
Keywords Remittances .Regime type .Government finance
International remittances—funds that migrants send to families in their countries of
origin—have increased from $110 billion in 2000 to an estimated $583 billion in 2014
(Ratha et al. 2015, p. 3). They represent the second largest source of external financing
for many developing countries, exceeding foreign aid as well as foreign investment.
St Comp Int Dev (2017) 52:349–371
Electronic supplementary material The online version of this article (doi:10.1007/s12116-016-9233-7)
contains supplementary material, which is available to authorized users.
*Malcolm R. Easton
Gabriella R. Montinola
University of California, Davis, Davis, CA, USA