Remittance and Corruption: how does the income level matter?

초록

How does remittance affect domestic politics? Remittance has increased drastically over the past 30 years, and its political impact has been the center of attention ever since. Focusing on the possibility of substitution between remittances and governments’ spending, existing literature argues that the substitution can improve governance by reducing the dependence of citizens on the incumbent, thereby weakening the clientelism network (e.g., Tyburski 2012, Esrciba-Folch, Meseguer, Wright 2015). We further develop this idea and suggest that this political effect would vary depending on the domestic economic condition. We argue that remittance would reduce corruption of the recipient government, and the alleviation effect would be greater as the size of the low-income group increase. Using panel data which includes up to 60 developing democratic countries from 1995 to 2018, we find evidence consistent with our expectations. We find that remittance reduces the corruption of the recipient countries and the corruption alleviation effect increases in countries with a larger low-income group.

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