How Good Governance (GG) Affects Diaspora Motivations for Remittances to Iran

Abstract

Abstract In this study, we examined different models for the motivation of the Iranian diaspora to send remittances to Iran, with and without governance indicators, to analyse the impact of economic factors and governance indicators on remittances. The results based on the generalised method of moments (GMM) method show that the income level of the origin and host country had positive and significant effects on the diasporas’ motivation for remittances to Iran. Also, Iran’s real exchange rate has a negative impact on remittances, whereas the interest rate differential is positive. The results confirm that the quality of governance and its indicators are essential factors for remittances. Overall, the macroeconomic conditions, along with good governance in Iran, have influenced remittances. Between investment and altruistic motives, altruism has been the primary motivation of remittances due to the lack of good economic and governance conditions in Iran during the years under review.