Worker remittances are the second largest source of external finance for
developing countries after FDIs, which has increased interest in measuring
their effect on economic growth in underdeveloped economies. In this study,
I analyze the causal relationship between remittances and economic growth
in two post-socialist countries - Armenia and Georgia, which experienced
significant emigration after the collapse of socialism. To minimize
endogeneity problems, I employ POLS (pooled ordinary least squares) and FE
(fixed effects) estimations in assessing the effects of remittance on
economic growth. Data set covers the 1997-2019 period. Results show that
remittances have a positive effect on economic growth in these small
post-socialist economies.