Remittances and Economic Growth in the Turkic Republics and Tajikistan: A Panel Data Analysis

Migrant remittances are an important source of external financing for developing economies, but their impact on economic growth remains ambiguous. This study aims to examine the long-run effects of remittances, foreign direct investment (FDI), trade openness, and tax revenues on real GDP and to identify causal relationships among these variables in five Turkic Republics (Azerbaijan, Kazakhstan, Kyrgyzstan, Türkiye, and Uzbekistan) and Tajikistan over the period 2005–2023. The analysis employed tests of cross‑country dependence and coefficient homogeneity, panel unit root tests, the Durbin–Hausman cointegration test, FMOLS and DOLS estimates, as well as the Dumitrescu–Hurlin panel causality test. The results showed a positive long‑term relationship between remittances and real GDP: the coefficient was 10.7917 for FMOLS (p = 0.0137) and 3.8556 for DOLS (p = 0.023). Trade openness also has a positive and statistically significant long-term relationship with real GDP: the corresponding coefficients were 1.1260 and 1.2183 (p = 0.000 in both cases). At the same time, the coefficients for foreign direct investment turned out to be negative: −1.7361 for FMOLS (p = 0.051) and −2.2875 for DOLS (p = 0.088). The results obtained confirm the significant role of remittances in the economic dynamics of the countries under study and indicate the feasibility of improving the mechanisms for attracting them into the formal financial sector and for their productive use. The findings underscore the need to develop formal financial channels, improve the efficiency of using money transfers, and direct external financial flows toward productive investments and sustainable economic growth.

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